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For now, anxious sellers in the Toronto real estate market who are hoping for a spring rebound seem evenly matched by optimistic buyers looking for a deal.

Bank of Montreal economist Douglas Porter looks at the Toronto housing market and sees a satisfying balance. But February is traditionally the month when the spring market revs up and Mr. Porter says any number of things could upset that balance – and the tilt could go either way.

So far sales have slumped – the most recent numbers show a 19.4 per cent drop in December compared with a year earlier – but prices have only edged down slightly.

This could be the market coasting to the soft landing that many economists have been predicting.

Mr. Porter, who is deputy chief economist at BMO, is betting that the market will continue to waft gently downwards as it has been doing since federal Finance Minister Jim Flaherty toughened up the rules on mortgages last July.

"It's hard to see what would push the Toronto housing market into a so-called hard landing."

Mr. Porter says the risks to the market include a hike in interest rates or reverberations from the United States as politicians grapple with the country's debt and spending. Europe could also go off the rails.

Another risk is that the market could spiral down in a "vicious circle."

"It is a possibility that buyers will step back waiting for prices to fall – and then they will – and buyers will step back even more."

At the same time, Mr. Porter says real estate in Toronto could climb again if the U.S. economy comes bouncing back.

"That is a reasonable prospect," he says. "We already know their housing market is on the road to recovery."

Canada's economy would receive a boost and broader sentiment would improve too, he adds.

Still, Mr. Porter believes the most likely scenario is that real estate prices in Toronto at the end of 2013 will be slightly lower than they were at the end of 2012.

The "incredible amount of building in condos" could lead that segment of the market to fall harder, he adds.

Economist David Madani of Capital Economics thinks the Toronto market feels an awful lot like the mood in the United States before the vicious circle started there. He believes buyers and sellers are at a stalemate in Toronto. Mr. Madani has long been calling for a 25 per cent correction in the market and he believes that sellers will eventually be forced to accept lower prices.

Mr. Madani doubts that many buyers will be lured into the market by low interest rates. He thinks they're more likely to be deterred by tougher borrowing standards and all of the warnings coming out of Ottawa about household debt. Investors, meanwhile, aren't likely to step up if they fear prices will fall – especially in the overbuilt condominium market, Mr. Madani says.

Fewer potential buyers mean that some sellers looking to upgrade will be unable to, Mr. Madani warns. In fact, this is already happening. Condo owners weren't making offers on single-family houses because they can't sell their units or they're afraid to even try.

Still, Mr. Madani says a spring rebound in the housing market can't be ruled out.

He notes that the market has slowed then accelerated again after past changes in the regulations.

But he figures the Bank of Canada will maintain a tightening bias in monetary policy to discourage such a run-up.