Toronto Is in a Housing Bubble
I live in Vancouver - which has become one of the most unaffordable cities in the world[1] and am from Toronto.<p>Watching Toronto&#x27;s market explode is like watching a horror movie that I saw take place in Vancouver over the last two years. The politicians, press, and real estate industry are spinning the same stories their counterparts in Vancouver did without providing an even plausible explanation for the rocket ship growth.<p>The key issue with Vancouver&#x27;s market is that prices have become decoupled from local incomes. The same thing is happening in Toronto.<p>In Vancouver, the main driver of decoupled home prices is foreign investment dollars, mainly from China.  I suspect the same is true in Toronto because prices there started exploding after Vancouver instituted a 15% tax on foreign buyers in August 2016.<p>If you&#x27;re interested in understanding the key drivers of the Vancouver real estate market, this paper by a SFU professor summarizes the data, provides a sensible solution, and convincingly refutes the tropes that are often provided as reasoning for the market&#x27;s explosion:<p><a href="http:&#x2F;&#x2F;www.sfu.ca&#x2F;content&#x2F;dam&#x2F;sfu&#x2F;mpp&#x2F;pdfs&#x2F;Vancouver&#x27;s Housing Affordability Crisis Report 2016 Final Version.pdf" rel="nofollow">http:&#x2F;&#x2F;www.sfu.ca&#x2F;content&#x2F;dam&#x2F;sfu&#x2F;mpp&#x2F;pdfs&#x2F;Vancouver&#x27;s Hou...</a><p>1 - where unaffordable is defined as the ratio of median home price to median income.