Realtor refutes TD’s over-valued market report

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A respected Toronto-based Realtor says the Canadian housing market is not overvalued, despite a report from TD Bank that claimed  prices are 10 per cent higher than they should be. But will brokers agree?

“I don’t think it’s over-valued globally at all,” Guy Yarkoni told CREW Tuesday. “The market is just shifting again. It’s a waiting game, but we’ve come to a strong spring and I’ve already noticed more multiple offers than last year.”

Lisa Reikman, chief risk officer of Canadian banking at Toronto-Dominion Bank, told the Financial Post that the biggest risks in the Canadian housing market include condominium overbuilding and uncertainty over how many investors are buying. While a spike in interest rates or unemployment could threaten Canada’s robust housing market, she said, the risk is fairly low.

Yarkoni, meanwhile, says it’s simple math that has driven up the price of homes.

“There is a strong demand, and there’s not enough property on the market for that demand,” he says. “That tends to build the demand, so we get more multiple offers and a higher purchase price.”

However, Reikman said TD and other banks will be closely watching the growing number of condos and whether or not those units are being used as a residence or as an investment property.

Yarkoni says that he has certainly noticed more investors purchasing condo units.

“A lot of my clients are investors, but I can’t speak for the whole market,” he says. “There is definitely a growth in the Canadian market that sees real estate as an investment.

“Plus investors globally are coming to Toronto and that does have an effect on price. For them this market seems cheaper than it is.”

As for the threat of an over-saturated condo market, Yarkoni says he doesn’t see a problem with the number of condos buildings.

“[Condos] are being built because there’s a demand for them,” he says. “I don’t think we’re at a point where we’ve overbuilt.”

Still, several factors will likely prevent a U.S.-style market collapse, Reikman told the Post, including conservative underwriting standards, a small subprime market, the requirement that mortgages with less than 80 per cent loan-to-value be insured and the tendency of Canadian lenders to keep mortgages on their books.

“We look at all of those things and think there are some pretty fundamental reasons why the U.S.-style collapse can’t happen here or is highly unlikely to happen here,” she said.

  • Jon on 2014-06-04 4:41:29 PM

    No surprise that a Toronto realtor is stating that the market is not over valued!

  • Angela Wong-Liao - Invis Inc on 2014-06-04 6:56:29 PM

    The current real estate market reminded me of the late 1980s, early 1990s when any properties were able to sell despite of conditions and locations. Ontario had a recession in 1990 to 1996, some real estate market value dropped by 40-50%, especially high rise condos and big houses. Yes, I believe the current real estate market is over valued and I believe a big adjustment may occur when interest rates start increasing.

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