[troutman]

Canada Condo Boom Could End With Ghettos, Ghost Towns, Some Analysts Fear


http://www.huffingtonpost.ca/2012/05...tml?ref=canada

While single family home construction grew a modest 0.6 per cent, condo construction exploded by more than 27 per cent over the course of the month, when adjusted for seasonal patterns.

The prospect of a housing bubble creating “ghost cities” is not just hysteria. It’s been on the minds of housing market analysts recently because of the bursting of the massive housing bubble in China in the past year, a market swoon so bad it exposed entire empty cities, waiting for occupants who will never arrive.

Obviously, the scale of the problem in Canada is much smaller. But the idea of empty condo buildings has many people worried about the ghettoization of Canada’s largest cities.

Toronto Star columnist Christopher Hume expressed those concerns in a recent article, in which he suggested the city’s condo complexes could end up being enormous new ghettos.

Hume argued that because condos tend be small, they rely on strength in the low-end housing market to keep their prices up. If a correction happens -- such as the one many predict Canada’s largest cities are in for -- those condos will lose value, will be turned into rental units, and will soon sink into poverty.

Foreign investors are crowding the real estate market, and forcing prices upwards. That has prompted some politicians and policymakers to call for a ban on foreign investment in residential real estate, as Australia recently did.