Request fills Toronto house costs not absence of supply study finds The Globe and Mail
“Recent house price increases in Toronto are being driven by demand from foreign and domestic buyers who are caught up in a bubble of growing price expectations, and are not due to a fundamental lack of housing in the city, according to a new study released Monday.
The report, written by Simon Fraser University assistant professor Josh Gordon for the Ryerson City Building Institute in Toronto, argues the rate of new home building u2013 including condo units u2013 has more than kept pace with the population growth in Toronto based on historical norms.
Pre-existing homes are not coming up for sale in the same volume as in the past, however, because owners are hunkering down as prices soar u2013 in some cases because they do not want to sell too early in a rising market.
Dr. Gordon said there is clearly a shortage of listings compared to current demand, but the shortage is not fundamentally a supply problem but one driven by an imbalance caused by speculative demand in Torontou2019s market, which is fuelling rampant price increases and a market bubble that will inevitably burst.
u201cAs housing bubbles are allowed to expand, many are hurt or drawn into unsustainable financial situations,u201d he warns.
u201cThis is particularly the case for young Torontonians. When housing bubbles unwind, there is major collateral damage and people are hurt through little or no fault of their own.u201d
The report runs contrary to arguments from many in Torontou2019s real estate sector, who argue the solution to soaring real estate prices in the city lies in bringing more housing onto the market for sale.”