Toronto Home Prices Could Fall 20%: Homebuilder

In a recent interview, Mitchell Cohen, the Chief Executive Officer of Daniels Corp., one of Toronto’s biggest real estate developers, stated that home prices in the city could drop as much as 20%. This prediction is based on his analysis of the current market trends and the impact of sustained demand from immigration.

A 20% Dip in Prices, but Not a Catastrophic Burst

Cohen acknowledged that there will be a dip in prices, but emphasized that it won’t be catastrophic. "Will there be a dip in prices? Yes," he said. "Is it 50 per cent? No. Is it 10 to 20 per cent? Probably." He attributed the potential decline in prices to the correction of the market, which had seen significant gains during the pandemic.

Canadian Home Values to Give Back Pandemic Gains

Cohen’s projections are in line with some economists who believe that Canadian home values will give back some of the 50% gain they saw through the course of the pandemic. This correction may already be underway, as the country’s benchmark home price posted its first annual decline in two years last month.

Markets Like Toronto Leading the Way Down

Toronto, which had previously seen the biggest gains, has led the way down in terms of market trends. According to Cohen, people will continue to come to Toronto, wanting to live and work in the city, despite any potential dips in prices. He emphasized that the units being built by his company will be filled, as immigration levels remain high.

Investors at Risk

Cohen noted that investors who bought units to flip or whose mortgage payments are higher than what they can expect to collect in rent may get into trouble as interest rates rise. However, he pointed out that any units forced to sell will ultimately find buyers or renters, given the record immigration levels.

Record Immigration Levels to Support Market

Cohen attributed the sustained demand from immigration to the importance of Toronto and the Greater Toronto Area (GTA) as an economic centre in Canada. He emphasized that people will continue to come to Toronto for work and other opportunities, which will help to support the market.

Impact on Investors

While investors came to account for about a fifth of the market in Canada through last year, Cohen noted that any units they’re forced to sell will ultimately find buyers or renters. However, he warned that investors who bought units to flip may face difficulties as interest rates rise and prices adjust to the new reality.

Expert Insights

Economists and experts have been warning about the potential risks of a market correction in Toronto and other major cities. The Trudeau government’s plan to double homebuilding could lead to an oversupply of housing, exacerbating the problem. Ottawa’s efforts to address the crisis may not be enough to prevent a larger decline in prices.

Toronto Home Prices Could Fall 20%: What Does it Mean?

The potential dip in Toronto home prices raises questions about what this means for buyers and sellers alike. While Cohen emphasized that a 20% drop is possible, he also noted that the market will continue to be supported by sustained demand from immigration.

Market Trends

The current market trends indicate that markets like Toronto have led the way down in terms of price declines. This could be due to various factors, including changes in interest rates and government policies aimed at addressing the housing crisis.

Correcting the Market

Cohen’s projections are part of a broader trend among economists who believe that Canadian home values will give back some of their pandemic gains. The correction may already be underway, as the country’s benchmark home price posted its first annual decline in two years last month.

Sustained Demand from Immigration

Despite any potential dips in prices, Cohen emphasized that people will continue to come to Toronto for work and other opportunities. This sustained demand from immigration will help to support the market and ensure that units being built are filled.

A 20% Drop: What’s Next?

If a 20% drop in prices becomes a reality, what does it mean for buyers and sellers alike? While Cohen emphasized that the market will continue to be supported by sustained demand from immigration, he also noted that investors who bought units to flip may face difficulties as interest rates rise.

Government Efforts to Address Crisis

The Trudeau government’s plan to double homebuilding could lead to an oversupply of housing, exacerbating the problem. Ottawa’s efforts to address the crisis may not be enough to prevent a larger decline in prices.

Market Trends and Expert Insights

Economists and experts have been warning about the potential risks of a market correction in Toronto and other major cities. The current market trends indicate that markets like Toronto have led the way down in terms of price declines.

Conclusion

Cohen’s prediction of a 20% drop in prices is part of a broader trend among economists who believe that Canadian home values will give back some of their pandemic gains. While the market may see a correction, sustained demand from immigration will help to support it.