Has Toronto Built Too Much Too Fast?
"The Bank of Canada is warning that certain overheated segments of the housing market could put Canada's economy at risk and has again singled out Toronto's condominium market as an area of particular concern," reports Kazi Stastna. "In its latest assessment [PDF] of Canada's financial system, the central bank said that imbalances in the housing market and high levels of household debt still pose an 'elevated' risk to the stability of the Canadian economy and are the two biggest risk factors on the domestic front — with the eurozone crisis presenting the biggest threat internationally."
"The bank said Canada's housing problem is particularly acute in Toronto, with a large number of unsold highrise units that are under construction or in the pre-construction phase," notes Stastna. "If these units are not sold over the next 12 to 30 months as they are completed, it could cause prices to fall and bring residential construction to a halt, the bank warned."
"If the correction to the imbalances in the condo market is sudden rather than gradual, it could provide an unwelcome jolt that has the potential to reverberate not just in other segments of the housing sector but across the economy."