“It's really not the end of the world,” Brad Lamb told CBC News.
“The market here is so well supported with employment. There are shortages of rentals, shortages of purpose-built rentals, and shortages of anything to buy,” he elaborated. “I think it's a whole lot of nothing.”
Lamb added that instead of fleeing Toronto, first-time buyers—who are projected to be among the sectors most negatively impacted by the new rules—will simply “adjust their expectations downward,” as Toronto’s economic fundamentals are still too stable to depart from.
Moreover, Lamb predicted that the most that the Toronto condo market might experience in the new regulatory regime is a “very mild” drop in activity, especially in the $250,000 to $350,000 price range.
However, prominent real estate data analyst Ross Kay begged to differ, saying that the “radical change” would prove to be highly detrimental to the Toronto market, which is already at what he called a “tipping point”.
“Certainly nowhere in North America has this ever happened,” Kay noted, adding that a “full correction” in Toronto is just beyond the horizon.
In particular, the newly mandated “stress test” on borrowers’ capacity to service payments at the Bank of Canada’s posted 5-year rate of 4.64 per cent will only “wipe out” a significant proportion of new buyers from the market
Projecting a 17 per cent plunge in national average sale prices, Kay stated that officials’ hopes of a slow and safe slowdown in the Toronto real estate market are severely misguided.
“They all think you can cool the market. But a market either escalates forward or it corrects. It's one or the other.”
MBN
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