A broad consensus seems to be emerging about the present & forecast state of the world economy: no double dip, but very slow and uneven growth for at least the next couple of years. Some recent examples:
- In a speech in Windsor last Thursday, Bank of Canada Governor Mark Carney listed “several reasons to expect a modest and uneven global recovery”;
- A CIBC economic forecast on September 22 characterized the present recovery as “The Great Disappointment” (following “The Great Recession”);
- A Scotiabank report on October 7 described how “the global economy is shifting to a slower lane of growth”;
- The Fall 2010 Economic and Financial Outlook from the Desjardins Group stated that “economic growth in the coming quarters will be nothing to crow about… interest rates will remain very low until both investors and monetary authorities are convinced that the global recovery is on solid footing”; and
- A Financial Post article on September 27 reports on a statement by Finance Minister Jim Flaherty that “the economic recovery remains fragile”.
If these forecasts are correct, we can expect to see an extended period of “slow but steady” growth and very low interest rates, and this would be very good news indeed for the Toronto real estate market. In the month of September we saw a very healthy turnaround after the slow summer months, with prices higher than in September of 2009 and promising to move even higher, perhaps approaching the record highs reached in the spring. The inventory of unsold homes is also relatively low, about three months’ supply, so there is a good balance between supply and demand; in fact in many areas it actually looks like a sellers’ market!
The bottom line is that the weak economic recovery is creating a “Goldilocks” real estate market, neither too hot nor too cold, and these conditions will likely persist for an extended period.