Canada’s real estate industry is something that must be monitored as a mortgage broker Toronto. After experiencing a summer season where we saw record-breaking sales as prices continued to rise, those close to the real estate market are beginning to wonder about a potential collapse in the Canadian housing market.

More specifically, questions have been raised about some of the country’s largest markets overheating, which could result in a steep market decline. Toronto and Vancouver are two major cities in particular who must be monitored closely as both have seen its affordability deteriorate directly in front of them.

Toronto has already reached a record-level high in the number of resales this year and Vancouver has seen its average sale price skyrocket by more than 30% year-over-year.

Of Canada’s four largest housing markets – which also include Montreal and Calgary – Toronto and Vancouver were the only cities who received a red circle under the affordability category on the Royal Bank of Canada’s monitoring dashboard, a chart that rates each city’s current status in a variety of categories.

A red circle on the chart indicates that the city is significantly outside of historical norms and are at a higher risk than usual. However, the affordability category was the sole area that both Toronto and Vancouver received a red circle. This just confirms that the biggest issue faced in each market is its affordability, a major factor being the price of houses and their significant rise.

One thing these markets are doing in response is building new condominiums.

This is something that experts see as a reaction to the incredibly low affordability that Toronto and Vancouver possess. Condos are generally not as expensive as detached homes while the construction of condos can help bring relief for the time being as 34% and 17% of all new condos being built across Canada are happening in Toronto and Vancouver, respectively.

However, RBC does not predict that the country will experience a housing market collapse over the next 12 months. After Vancouver hit an all-time high in home sales earlier this winter they have experienced a drop in sales, something that has helped bring the risk of a market overheat down.

Interest rates are not expected to rise in the coming months, signalling there is little risk over the short-term at this point.

While it’s unlikely these numbers can maintain this pace it’s surely something to keep an eye as we move forward. Industry experts are anticipating the market to cool down in 2017 and that’s something major cities can use as a bit of relief before they suffer from overheating.

In a market as competitive as Ontario’s capital it’s a good idea to consider consulting a mortgage broker Toronto if you are considering purchasing or selling a home. By working with a mortgage professional like myself, you will have access to the knowledge and local market expertise that is obtained by experience in the industry for over 9 years.

If buying a home or selling is something you’re considering doing, give me a call today!

Source: http://www.rbc.com/economics/economic-reports/pdf/canadian-housing/healthcheck-september16.pdf