Toronto braces for a deflating condo bubble
By Andrea Hopkins
TORONTO (Reuters) - Each panelist at a recent Toronto real estate conference had a reason why the city's condo market is not a bubble. But the developers, the lender, the receiver, the marketer and the real estate agent each talked about the things that worry them.
"Everyone is uncertain about what is going to happen in the condo market in the next few years," said Steve Gagro, a senior manager at Laurentian Bank of Canada who specializes in lending to real estate developers.
With 325 condominium projects on the market and another 173 towers under construction, Toronto's skyline is spiking with condo units and cranes, with more new buildings underway than in any other city in North America.
The building boom and 15 years of rising prices have stirred worries about a real estate bubble in Canada's largest city, where historically low interest rates have encouraged buyers to take on more household debt than ever.
Industry stakeholders stress that the potential for a crash is slight, and most of the talk at the Queen's University seminar was about the strengths of the market.
But as construction cranes swiveled outside the windows, the discussion repeatedly circled round to the danger signals that have become impossible to ignore, similar to pilots explaining why they are packing parachutes to take onboard.
The developers talked about tighter financing and affordability. The real estate agent wondered about a growing gap between new condos and the resale market. The bankruptcy specialist worried about high supply and few players. The salesman talked about skittish investors and bad press.
While it sounds like Canada may be importing the 2008 housing bubble from its neighbors to the south, nearly everyone in the industry argues that Canada is different. Continued...