The Reason Why Toronto Real Estate Prices Will Continue to Rise

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http://www.cbc.ca/beta/news/business/housing-prices-cibc-tal-1.4401743

TRANSCRIPT

Speaker 1: Okay. This next article I want to share with you is from CBC and the headline is Toronto, Vancouver house prices set for rise: CIBC Report.

“The housing markets in Toronto and Vancouver could resume their previous upward trajectories amid conditions of tight supply and burgeoning demand,” according to a new report from the CIBC World Markets. CIBC and Benjamin Tal, who’s a previous guest on the True Condos Podcast, has put out this report, and it basically says that don’t sleep on the Toronto housing market, especially. Yes, overall the market now is a little bit softer than it was maybe six months ago, certainly in the springtime, low-rise market in particular, as we’ve talked about many times, has changed dramatically from what it was in the days of March and April, but basically what he’s saying look, his quote is “When the fog clears, it will become evident that the long-term trajectory of the market will show even tighter conditions.”

The supply issues facing centers such as Toronto and Vancouver will worsen, and demand is routinely understated. This is the most interesting point here, that demand is routinely understated, so basically he’s saying that we don’t always capture the amount of demand there is. It’s an interesting point to make. As prices continue to rise, we have this supply/demand curve, and it tells us that if prices are continuing to rise, there’s more demand than there is supply. But, how much demand is there? It’s a very difficult thing to measure.

He talks about some of the things that are often missed in the forecast, and the measurements of demand. The people who are not buying, but who would like to buy. The people who are not buying, but are preparing to buy in the future, and so whenever there is a market slowdown, and the sales numbers decrease as we’re seeing right now in the low-rise housing market, then it creates this pent-up demand situation for next year, for the year after and so on. There could be a scenario where yes, the market if for low-rise houses in particular is down now, but in the year’s ahead, the rebound when that demand can no longer be held back and is released out into the market, then the rebound in this market could actually rise even more than the market that we just experienced in the past year or two.

Interesting information there, so definitely worth checking out this article.