The Real estate bubble or otherwise commonly referred to as housing or property bubble is an economic bubble, which comes about periodically in either a global or local real estate market. It is mostly defined by the sudden increase in valuations of property like housing for a while until they get to a point where they are unsustainable and thereafter decline.
Toronto’s home prices are set to fall over the next three years by 15% as per the report released by Toronto -Dominion economists. Toronto, according to the Royal Bank of Canada is one of the hotspots with a lot of activity in the housing market. Then according to the Canadian Mortgage and Housing Corp, the Canadian housing market is now cooling off. Speculation has started to maul over the residents of Toronto after the recent changes in the rules governing mortgage lending. Last month, Jim Flaherty, the finance minister changed amortization periods.
According to the homeandcondo.ca, the maximum amortization period used to be 30years but then changed to 25 years. Such changes, coupled with the expected interest rates rise from the Bank of Canada, have left people fearful of the effects that will transpire to the Canadian housing industry. It is said that such changes will mostly affect the new homeowners, because they make 50% of the new home purchases and 25% of the re-sales. Read more →