Homebuyers have been “blinded” by historically low interest rates causing a rush of sales in the housing market, which is unsustainable, says an analyst.
“What we are seeing is much more consistent with a boom economy, not a recovering economy,” Benjamin Tal, senior economist with CIBC World Markets, said in an interview.
“The problem is, people are rushing into the market and not being prudent … Consumers are blinded by the rates.”
With two months to go in the year, sales of existing homes in the Toronto area hit 74,721, just edging last year’s total figures of 74,552, according to figures released by the Toronto Real Estate Board.
Existing home sales soared to 8,476 in October, up 64 per cent from the same month last year.
The average price for a home in October was up 20 per cent to $423,559, the highest on record.
Tal says activity in 2010 and 2011 should be much more subdued, especially as rates notch back up.
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