When the Toronto real estate market came crashing down in 2008 there were many people who were astounded that this kind of thing could happen in this day and age. However, there were many others who were not surprised by the events and had, indeed, been predicting that this very think would eventually happen.

The loss of the subprime market has been held as one of the leading causes of the real estate market crash. Sub-prime mortgages were approved at an amazing rate by all mortgage lenders. Such loans involved using lending practices that put the lenders in a higher risk category, such as lending more money to borrowers to buy real estate than they really could afford, offering deals on the amounts of down payment required and offering loans at lower than standard interest rates. As a result, many of the major lending institutions found themselves in a credit crunch with many of the borrowers unable to meet their payment obligations. Companies were forced to declare bankruptcy putting millions of people out of work and forcing the lenders to foreclose on the mortgaged real estate.

The crash of the sub-prime mortgage industry has been the focus of news reports for the past year in Toronto and elsewhere. While millions of Toronto homeowners have been affected, no one is quite certain as to the initial cause of this real estate downturn.

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