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<\/a>March came in like a Lamb here at BuzzBuzzHome<\/a>.<\/p>\nAt the start of the month, we featured a short video <\/a>with Brad J. Lamb of Lamb Development<\/a>, talking about his latest booklet, “The Myth of the Toronto Condo Bubble.”<\/p>\n But that was just the start of a much bigger conversation about different aspects of development in Toronto \u2013 what buyers want versus what they can get, whether there will be a condo meltdown and even whether the city should say yes to a casino.<\/p>\n Check out the Q&A below:<\/p>\n BuzzBuzzHome: In “The Myth of the Toronto Condo Bubble,” you mention that there\u2019s a lot of fear, and in the pamphlet you refer to people as waiting for this almost-Biblical meltdown. Why do you think that is?<\/strong><\/p>\n Brad Lamb: I think that the condo market in Toronto is much like the showy cousin that shows up in Cadillac and a bright jacket, sunglasses and a gold watch and seems to be shimmy-shammying and fast-talking. And everyone wants him to fail. And everyone wants that guy to fail because he\u2019s too loud and too successful.<\/p>\n So I think that there\u2019s a sense that it\u2019s the Johnny-come-lately, \u2018How dare you be successful? How dare you be so successful that you\u2019re the most successful in the entire world?’ That\u2019s what the Toronto condominium market is.<\/p>\n There\u2019s just something about success and Canadians. Canadians want you to be successful, but not too successful because then they want to take you down a peg.<\/p>\n And the thing is, unlike a house, which a single-family home might take about six months, it can take you three to four to five years from the time you knock down the building that was there, you put in a sales office, you sell it, you get approved, you get your financing and build it. It can be four or five years. And it\u2019s so in your face, every day. And people just don\u2019t like that. They don\u2019t like the constant change. They don\u2019t like uncertainty.<\/p>\n There are a lot of forces in any city that prefer things to be exactly as they were. Let\u2019s live in a Toronto where there are horses and carriages, where we had farms on Avenue Road. The city has to grow up and embrace itself for what it needs to be. And that means we have to have hundreds and thousands of homes in the sky.<\/p>\n BBH: For a bubble to burst, what needs to happen in Toronto?<\/strong><\/p>\n BL: First of all, there has to be a bubble. And there is no bubble. I lived through a bubble bursting in a much, much smaller Toronto, a Toronto of about 3.8 million people in the late 80s. We horrendously overbuilt our \u2013 it wasn\u2019t just our condominium economy \u2013 but we overbuilt our condominium economy and we drove prices up significantly higher. There was a tremendous amount of speculation in the marketplace. And then of course the entire economy hit a wall and we had a recession.<\/p>\n And in that recession, we had interest rates that were 14.5 per cent to borrow money to buy a house. The unemployment rate was in the 13 per cent range and inflation running at a rampant number. People stopped buying.<\/p>\n And one of the underlying factors in that era was that there was a phenomenal amount of panic and fear. Where Canadians didn\u2019t really know if they were going to have a job today, tomorrow or the next day \u2013 there was a tremendous amount of fear about employment.<\/p>\n There was a huge amount of fear about borrowing money because first of all, it\u2019s hard to borrow money, and borrowing money at 14.5 per cent made any investment ridiculous \u2013 you just couldn\u2019t make money on it from the standpoint of buying real estate. And it took such a huge chunk of people\u2019s personal income to be able to afford a home that it caused massive widespread panic.<\/p>\n And that\u2019s what you need for a bubble to burst. You need everybody to panic.<\/p>\n In the current economy, we have unemployment at 7 per cent, we have interest rates at 2.8 per cent to buy a home, we have inflation running below 2 per cent so there\u2019s no fear of people losing spending power. Yes, the economy is growing by 1.5 to 2 per cent but it\u2019s growing by 1.5 to 2 per cent, it\u2019s not sliding minus 3 to 4 per cent.<\/p>\n We\u2019re just kind of in a malaise right now, where the economy is going to grind through slow growth and Canadians are not buying real estate at a frenetic pace.<\/p>\n And I think it\u2019s very easy to see that the likely path of the economy for the next five to ten years is tepid growth and very low interest rates.<\/p>\n And the other part of that is is just the fact that more and more young people they want to live in cities, they don\u2019t want to live in the suburbs so you see in cities like Brantford and Hamilton and Sarnia getting raided. The young people are leaving \u00a0\u2013 they\u2019re not staying. And they\u2019re moving to bigger cities and that\u2019s benefiting cities like Toronto.<\/p>\n