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Fitch: Ontario housing market 25% overvalued

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Real Estate Professional | 06 May 2015, 03:31 PM Agree 0
It’s been said before, but it seems the chorus is contagious – yet another report is calling the Ontario housing market overvalued.
  • EddieN | 06 May 2015, 04:00 PM Agree 0
    Smooshing all types of housing into one pile, taking an average and saying that the market is overvalued is incredibly wrong. Low rise housing in urban areas is getting more and more expensive because there is lack of it, without any new being added. Supply and demand.
    Condo prices have remained flat because it is a different market segment where the supply meets or exceeds the demand. Supply and demand.
  • Numbers Guy | 06 May 2015, 05:53 PM Agree 0
    I think it's unfair to criticize the methods of what is a highly sophisticated agency. Fitch has very exhaustive and complicated methods of working out valuations - without these important models they would not have been able to value or rate things like Mortgage Backed Securities in the US - oh, hang on, didn't the collapse of those AAA rated products help contribute to the global market collapse....
  • DJD | 06 May 2015, 11:46 PM Agree 0
    I've been in the real estate market for over 40 years. I was working in the GTA real estate market in 1989 when house prices had reached record highs. In the face of concerns by the broader financial community, the real estate brokerage industry vigorously defended the high prices. The message was that prices in the GTA were fine - nothing to worry about. The rhetoric at the time was that Toronto had evolved into a city state that enjoyed a world class status and that the financial community just didn't get that. The residential market then corrected by about 25% by the end of 1989.

    The market lesson was that there's always the temptation to suggest that 'this time is different'. The fact remains that all segments of all global economies experience cycles. Canada is no exception. The broader financial community, including Fitch, are becoming concerned as they were in 1989. They certainly can'y all be wrong. Let's at least be open minded in the face of mounting evidence that things may not be as fine as we would like to believe. We owe that debt of credibility to ourselves and our clients.
  • Chris | 07 May 2015, 07:21 AM Agree 0
    DJD, I am entering my 30th year in the business in September. I would say that your comments are dead-on. This run can't go on indefinitely. And, yes, like the 2008 Wall Street melt-down there are many voices stating legitimate concern, many of which are being ignored. If I'm not mistaken we are experiencing the longest post-war run in real estate prices in history. Should that concern us? Yes. What do you do about it? I'm not really sure. No one wants to look like Chicken Little. My concern is for the young buyers who are way out on a limb, debt-wise. It could get ugly.
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