Guatieri indicated that the price for a family residence should be "about four or five times income," however the current market in Toronto and Vancouver is closing in around $700,000, which averages 10 times the earnings of the home owner. Even though TD Bank had at first forecast 1.6% gains in 2011, this kind of real estate hyper inflation in the middle of economic recovery has in fact compromised the market, and they are already seeing the signs of cooling this year derived from the surge of new housing starts and new listings. places like Mississauga are still seeing an escalation in new Mississauga condominiums but sales could start to cool.
In their discussion with "The Vancouver Sun," TD admitted that their forecasts have been off in the past, because their late 2009 forecast did not anticipate the rise in first quarter sales for that year that was an unpredicted "move by buyers and sellers to pre-empt regulatory and interest-rate changes". The looming harmonized sales tax due to take effect in July in Ontario and British Columbia definitely impacted markets in those provinces. In expectation of this July time limit, the Bank of Canada has now declared its intention to lift their overnight target rate by July to counterbalance the recent record breaking low rate of 0.25 percent. Higher borrowing costs should act on cottage country with deduced values for places such as Wasaga Beach real estate and this could constitute an opportunity for buyers.
As family incomes catch up with the level of inflation -- a whopping 8 percent over the past 8 years -- TD predicts that overvalued housing prices will continue to fall from 15 to 10 percent by the end of next year. This is bolstered by a decline in MLS sales, that as well includes Toronto MLS listings, over the last 6 months that the Canadian Real Estate Association has observed. But everyone can spot signs that the whole housing market has been affected by the high percentage of boosted values in the cities -- how far this influence will spread is the primary question.
Gauthier describes his forecasts are a consequence of the "stronger supply response," and that the "market balance is now expected to be somewhat softer next year, consistent with market conditions more favourable to potential buyers and a mild depreciation in home values". But Guatieri thinks the approaching slow down period does not automatically mean that housing prices will indeed fall, however predicts it as a gentle adjustment after the recent surge. One fact both Guatieri and Gauthier do foresee on the horizon, though, is that regardless of when it strikes, the calming trend will not last forever, and inside of 3 years the average real estate price in the country should find a equilibrium and return to its fair market value.
By: Stefan Hyross
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Stefan Hyross follows the real estate market and writes about Mississauga condominiums and other market segments. For more information about Toronto MLS listings or to follow recreational areas like Wasaga Beach real estate please feel free to go to the website and inquire. www.john-lavin.com/
http://www.articledashboard.com/Article/Predictions-Are-For-A-Slowing-Real-Estate-Market-In-Canada/1606027
