Are We in a Bubble

BrianPersaud

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Sep 27, 2007
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Toronto
#1
TD bank recently published a Resale Housing Outlook report (see here)



TD comments if the real estate market is in a bubble.

Conclusions:

* On a national level, they feel that prices are overvalued 12% based on market fundamentals (income growth, job growth etc).
* Most of pent up demand from the sales crash last year should be clear by now
* From next year on, we should see the real estate market return to growth based on fundamental drivers (or have price growth slow to catch up to the fundamentals since incomes are expected to go up).
* They don`t expect prices to fall, in fact their fear is prices may continue to rise.


Real Experts Comment: Yes the market overshot, and people have been taking advantage of rates to get into the market. As more supply comes online in the market (finished condos, and new listings) and as supply of buyers capable buyers fall, prices should level off to a lower growth rate.

As of today, this is no bubble.