According to CIBC economist Warren Lovely, house prices in Ontario are overvalued by more than 11%. This could be a cause of concern for the economy in Ontario as a lackluster housing market could pull down the overall economy.
The economy in Ontario was supported by a buoyant housing market in 2010, which resulted in better than excepted economic performance. But the trend is about to be reversed. Most analysts believe that the real estate segment will see a downward movement next year. The Globe and Mail reports that the market is expected to be controlled by buyers and weak demand is likely to move prices lower.
The Economist also confirmed that the Toronto real estate market is significantly over-valued and the high prices may not be sustainable. Other problems for the sector include slowdown in construction activity and a faltering US economy, both of which will have a negative impact on the real estate market. If the US unemployment rate does not improve soon, there could be further trouble not only for the US economy, but for the rest of the world as well.
Although, this is not good news for people looking to sell real estate in Ontario, buyers have another opportunity to acquire a house or commercial property at a reasonable price. Interest rates are still quite low and any major mortgage lender will be willing to offer a good deal on a mortgage.
