Vancouver, Toronto home prices continue to show ‘bubble behaviour’
http://globalnews.ca/news/2221250/vancouver-toronto-home-prices-continue-to-show-bubble-behaviour/
“Overall, while most markets are responding logically to softening domestic economic conditions, Vancouver and Toronto continue to exhibit bubble behaviour,” David Madani, economist at Capital Economics said in a research note this week.
“Over the longer-term, we still believe that these housing markets will experience major price reversals.”
I agree, but he also says:
“While foreign investors are no doubt playing some role, we think this explanation is overblown,” the economist said. “Low interest rates and self-fulfilling expectations of higher prices continue to inflate actual prices independently of fundamentals,” he said.
I think foreign investors are more of a factor than they are admitting. Many projects are being flagrantly marketed to the Chinese demographic (both foreign and domestic), and developers are now
going directly to China to woo potential investors.
How many GTA condo projects currently in development will not have any floors or suites ending in a "4"? This alone indicates where developers are sniffing out the money.
I'm not even sure they can easily track such data, as many foreign investors might be using local contacts or businesses as fronts, and I don't think anyone benefitting from the windfall (banks, real estate agents, developers, government, etc) is ready to pull the plug by taking too hard of a look.
Once the horses get spooked, either through restrictions, audits, or any other form of scrutiny or intervention, the prices will correct and everyday average people might be able to afford everyday average housing in this city. It will never be cheap, but we might at least see pricing that more accurately reflects the true fundamentals.
