**Toronto Housing Market Labeled as ‘High Risk’**
**Housing prices in Canada are rising rapidly.**
Social distancing measures due to the COVID-19 pandemic have led to an increased demand for more spacious housing. Prospective homebuyers are focusing on suburban homes and larger apartments in smaller cities to secure as much space as possible. This trend is particularly noticeable in cities such as Toronto, where the housing market is on the verge of significant instability.
Recently, the Canadian housing agency upgraded its assessment of the Toronto housing market to a “high-risk” category, indicating a high likelihood of a sudden and significant price correction in the near future. The duration of the pandemic-driven housing boom remains uncertain, and once people start returning to city living, the bubble is expected to burst rapidly.
According to the Canadian housing agency’s Housing Market Assessment released on Wednesday, a significant percentage (76%) of homes listed for sale in October, November, and December were sold within the same three-month period, signaling an overheated market. Bob Dugan, the chief economist at CMHC, highlighted the aim of identifying vulnerabilities that could precede market or house price corrections.
Besides major cities like Toronto, the overheating housing market is now affecting smaller Canadian cities. Communities such as Tilsonburg and Woodstock have witnessed a 35% annual increase in housing prices since February. The potential impact of a market crash on these smaller areas remains uncertain.
Dugan emphasized the shift in price acceleration trends noting that imbalances are not solely limited to major cities like Toronto and Vancouver but also occurring in smaller locations nationwide.
