Toronto home prices may jump 25% in 2017 with cycle starting to mirror others that ended badly: TD Economics

Toronto’s housing market is likely to stay strong for the rest of the year, with home prices jumping as much as 25 per cent, amid hints that speculators are fueling demand and posing a potential risk to the economy, TD Economics’ chief economist Beata Caranci said.

A “strong Toronto home-price forecast is not a vote of confidence in market fundamentals,” Caranci wrote Monday in a note to clients. “It’s getting harder to ignore warning signs that market demand pressures are increasingly reflecting speculative forces.”

Residential prices in Canada’s largest metropolitan region are forecast to grow 20 to 25 per cent this year, up from a previous estimate of 10 to 15 per cent, according to the report by TD Economics, part of TD Bank. Toronto-area prices have climbed 19 per cent in the past 12 months, the fastest clip since the 1980s, when a frenzied housing market resulted in year-over-year increases of 55 per cent, Caranci said.