Is there truth to the notion that you can have too much of a good thing?

According to a new report released by Bank of America Merrill Lynch Global Research, this is exactly the case with the hot condo market in Toronto, who speculate that this rising star will crash and burn.

The authors of the report feel that there is soon going to be a flood of inventory into the market with the myriad of new condo construction projects underway in Toronto.

They believe that the sheer volume of construction will inevitably throw the mechanics of supply and demand out of whack- and put downward pressure on prices.

Construction levels in the city have hit record levels, according to reports. Similarly, they draw on anecdotal evidence to suggest that over half of buyers snapping up the preconstructions sales are property investors eager to get in on the action.

The authors calculate that with the current construction, there is approximately 4.8 years worth of inventory in the condo pipeline.

So, are these fears of a condo market correction viable- or is the market just hot enough- and the demand so substantial now and in the future to keep the market humming along?

As Steven Fudge, Sales Representative, Bosley R.E. Ltd, told Propertywire, the sky may not be falling right now-but current conditions portend the seeking of shelter through strategy- particularly for property investors.

“One only has to see the massive number of construction cranes across Toronto's skyline to be leery of an over-supply of high-rise condominiums. Huge sections of 'planned living communities' and 'luxury branded condo-tels' in the City have been targeted and sold to investors. As more of this inventory is completed anticipate the supply to outstrip demand. Both market values and the rental income they currently generate could decline. “

And as Fudge suggests, that should the market begin to deflate- much of the debris will come crashing down around these condos:  “The moment the economy turns bleak and more investors need to liquidate; we could experience a massive fallout in the condominium market. If there are going to be any cracks in the veneer of Toronto's robust market, it will appear first in the condominium high rise market. Note, I'm writing about the ubiquitous point tower high-rise portion of the condominium market which feature cookie-cutter floor plans, generic finishes and abundant 'lifestyle' amenities. “

 “Condominium developments which are modest in size, architecturally unique, well-designed, feature a garden, terrace, or panoramic view, and with more than one parking space, are more likely to retain their value. The local market of down-scaling boomers, professional couples and the creative professional first time buyer are keen on condominiums that are smaller in scale and in proximity to any of the city's original 'neighbourhood villages'. My advice to an investor is to buy not where most investors are purchasing, but in the buildings and neighbourhoods considered attractive and desirable to the local market.”