“The real estate market is so hot right now, there’s no way it’s going to stay like this forever,” Sonshine said at Bloomberg’s Toronto office Thursday. “But you can’t do too many projects or you just won’t have the cash, and you don’t want your leverage to go up. We just got our credit rating upgraded we don’t want it to go right down again.”
One thing is clear so far: Millennials have had a huge impact on the GTA rental sector because of their willingness to pay a hefty price — on average about $1,800 a month — to rent sky-high new glass-and-granite condos an easy walk from work.
“We see in our market, a lot of younger millennials are actually being forced to move out of the market. So it’s a concern for us about the labour down the road,” Salcito said. “What happens when the people we need to do jobs, just normal jobs, like be a teacher, can’t even afford to live here? It will have a big impact in the future.”
“We expect such market conditions to fuel further rapid price increases in Canada’s hottest markets in the near term,” RBC said. “This would mean that owning a home — especially a single-detached dwelling — at market price is likely to become even less affordable in those markets.”
As today’s Hot Charts show, that’s below 2007 levels despite home prices surging about 50% over the last nine years. That’s not to say one should be complacent about the risks posed by household debt. A disorderly deleveraging can never be ruled out should the labour market take a dive and the housing boom turn to bust.
“News continues to abound about the ‘recklessness’ of Canadian households who just can’t stop buying homes in Toronto and Vancouver,” said chief economist Stéfane Marion. “Despite a collapse in oil prices in 2015, home prices in these two metropolitan areas baffled expectations with another year of strong increases.”