There has been a recent barrage of predictions about the future of Canadian Real Estate/home prices. Some excerpts from the Toronto Star below have the prices declining anywhere from 5 to 25%. The Toronto Real Estate Board analysts are predicting a moderate increase of 2-4%. These are fairly broad predictions. Prices are determined by supply and demand. Think about the demand in the GTA including real population growth. What bothers me about these extreme predictions is that the worst case scenario is stated for maximum sensational response and then the article is tempered with the more moderate predictions as a nod to balanced reporting. You can sense the reluctance in these articles as they slip in the optimistic predictions where they won’t be noticed (hopefully). But there is a self fulfilling aspect to this that doesn’t help any of us. Homeowners or related industries. This is irresponsible media in my opinion. It is no surprise but I am still irked. If MOST analysts agree that the market is not going to fall but will softly land, why is David Madina the analyst of the day? Because he is the most negative? How is that the criteria for center stage? That’s my rant for today. Read the quotes below in the style of “2012 end of the world reporting”:
David Madani] did not look at Toronto specifically, he said in an interview Friday. “But lots of markets look frothy, and Toronto would be included. The aggregate factors that are affecting the Canadian market are also affecting the Toronto market. Toronto is not unique from market forces.
David Madani, an analyst at Capital Economics, predicted this week that average housing prices would fall 25 per cent in the Canadian market, which he argued could push the country into a second recession.
Madani said homes are overvalued, based on historical price-to-income ratios.
His is an extreme view — most analysts think the market is in for a soft landing with prices flat-lining or going down slightly.
But many analysts think the market is due for a correction of 5 to 25 per cent.