Urbanation is quoted in the Toronto Star today saying that there is no bubble in the Toronto CMA condo market (see article here).
We found it interesting that Manhattan based consultant Jonathan Miller thinks Toronto is in a bubble (not sure why someone in NYC would know more about Toronto's condo market than Urbanation, CMHC, and TREB analysts that have all said we are not in a bubble?).
According to Wikipedia a real estate bubble is "characterized by rapid increases in valuations of real property such as housing until they reach unsustainable levels and then decline"
In Q2-2011, pricing in the new condominium market was up 7.5% annually according to Urbanation's Condominium Market Survey. Is that a rapid increase?
Pricing in the new condo market was greater than 7.5% annually in:
1997: 1 quarter
1998: 2 quarters
1999: 2 quarters
2000: 4 quarters
2001: 3 quarters
2002: 1 quarter
2006: 4 quarters
2007: 3 quarters
2008: 3 quarters
2009: 1 quarter
2010: 3 quarters
So if people think we are in a bubble based off price increases (the definition of a bubble), why didn't the "bubble burst" in any of those 11 years mentioned? Why didn't things "end badly"?
Perhaps there is another definition of bubble that Urbanation is not aware of?
The big concern must be the increased level of investor activity. People seemed to be scared of the so-called "speculative activity" in the new condo market, however the resale condo market is still very strong and most of the newly registered buildings have experienced very strong sales-to-listings ratios as these higher priced investor units are snapped up by end-users. The lease-to-listings ratio in the condo rental market is sky high, with bidding wars occuring for larger units.
Urbanation will be the first to bring to our clients attention any data that would point to a future failure in the market.
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