Originally Posted by Albern
This is what I was hearing on the news a few months back. Any idea when you think this will happen? I'm in the market (Toronto) but haven't seen much of a drastic change yet; mind you this is solely based on asking prices, I have no access to sale prices.
When what will happen? The crash has already happened. In July 2010, only 6,564 homes sold in Toronto compared to 9,967 the previous July. Nationwide, sales have slumped by 25%
since the beginning of the year and prices are now flat. In fact, prices are a lagging indicator. In an environment such as this, many protential sellers simply try to wait it out by putting off selling. But we will see next spring that as all these reluctant sellers put their houses on the market at the same time, prices will be forced down because no one will be buying.
If you're talking about when the market will bottom out, I'd say not before 2015 at the earliest. The last real estate bubble in Toronto burst in the early 90s and didn't regain its previous highs until 2003. But if you mean the time it would take to recoup value on investment, much longer when you consider that each home sale/purchase involves closing fees, realtor commission and land transfer tax which can total over $30k in many cases. People buying now or who bought a couple years ago are going to be in negative equity for years.
Here is some more scientific literature on the topic: https://s3.amazonaws.com/policyalter...ing_Bubble.pdf