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Vancouver and Toronto 'ripe' for housing correction?

Home resales dipped fractionally in the month of July by 0.1 percent, after making significant gains in June, according to figures from the Canadian Real Estate Association.

But a research note from TD Economics points to the vulnerability of the Toronto and Vancouver housing markets, relative to others in Canada. Economist Sonya Gulati, the note’s author, says going forward these two cities are ripe for a correction to bring them in line with “balanced territory.”

Th sizable immigrant population in Vancouver and Toronto has created demand for new homes. But Gulati says demographics suggest the builders are over-building. 

“Whether or not they’re going to pull back, or what that will mean for the resale is the big question mark," she tells BNN.

Aside from a supply glut, Gulati says real estate activity is expected to “temper” within the next 18-24 months because of dimmer economic fundamentals and mortgage rule changes.

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