An article of The Star reported that the booming condo market has been stabilizing rather than a destabilizing in Canada's housing landspace.
The article included that the Canadian Imperial Bank of Commerce (CIBC) World Markets Report said that the demand appears to be steady. Also, the number of new units could soon outstrip demand by some 2,000 units a year. This could depress both condo values and rents and create "a wave of sales in the resale market that will directly compete with the upcoming influx of new units."
Economists Benjamin Tal and Andrew Grantham released a paper entitled: "The Many Faces of the Canadian Housing Market." They mentioned that the Canadian real estate market is not at any risk of a U.S.-style housing meltdown.
"Unlike the situation Stateside, there isn't anywhere near the same degree of overbuilding in Canada relative to household formation. In fact, the ratio of housing starts to household formation is not far from its long-run average," the paper noted.
BuzzBuzz Home News also added that between 2007 and 2014, the demand for condo rentals remained high, not just because of the city's attractiveness to new immigrants, but because many of the region's residents have been unable to afford home ownership, due to rising home prices.
"Based on demographics, we estimate that demand for rental units in the GTA will average 12,000 a year in 2015 and 2016. And that could fall a little short of upcoming supply. According to different sources we estimate that the supply of rental condo units will top an annual average of 14,000 units in 2015 and 2016 - suggesting excess supply of just over 2,000 units a year," as mentioned in the article.
Another article of BuzzBuzz Home News reported that people traditionally buy investment condos to grow their money but CIBC report says that the pace of price growth in the condo market "is hardly impressive," with most of the price increase in cities like Toronto and Vancouver coming from the low-rise segment.
"And that's where the vulnerability is. We estimate that roughly half of the stock of rental units in the cities belong to [investors]. To the extent that higher rates and/or low rent inflation challenge the economics of rent, we might see a wave of sales in the resale market that will directly compete with the upcoming influx of new units," the report reads.
A report from The Globe and Mail, the city had a backlog of nearly 3,000 unsold condos last year, yet condo starts in Montreal rose 19 per cent, defying analyst expectations for a slowdown in new construction.