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There are so many conflicting stories about real estate these days. Sitting in a local restaurant, you might overhear one conversation about how hard it is to buy today, with properties almost always attracting multiple offers and selling for well above asking price. Another table might be talking about the new condo development downtown, and how it sold out overnight. And of course, there's always one expert in every crowd convinced that the market is about to crash, with huge price reductions to quickly follow. It's no wonder people get confused and concerned about the future of the real estate market...
The fact is, real estate is still very much in demand, and there are a few very good reasons we can investigate further to see why that's still the case. First and foremost, let’s remember that this is Canada! With so much turmoil around the world – Syria, Africa, Asia, the economic woes of Europe – Canada stands as a safe refuge from war, famine and religious persecution. In other words, a solid investment. Our doors are open to immigration, and approximately 300,000 immigrants make Canada their home every year (with the majority settling in Ontario). Those people need a place to live, and that drives our growing need to develop new properties for sale.
Secondly, our economy is very strong right now. Unemployment is low, and our earnings are relatively high. As Toronto and the GTA have grown in population, stores, restaurants, and other services have popped up constantly to meet the growing demand.
Third, interest rates are at an all time low, making homeownership more affordable than ever before. While most financial experts agree that rates will slowly increase over the next couple of years, the Bank of Canada has been content to leave rates alone for the time being, and that has inspired a great deal of investment in real estate.
The fourth factor is supply. Immigration is out-pacing new construction starts, and builders cannot build fast enough to supply the demand. This problem is compounded by the stagnating number of rental units available in the GTA (very few rental units have been constructed since the 1970’s). Houses and condominiums are often being purchased as investments to generate rental income, and are therefore taken out of the supply inventory for those interested in purchasing for themselves. Add in the fact that the GTA is limited in its physical growth (by Lake Ontario in the south, and the Oak Ridges Moraine in the north), and you can start to appreciate why supply is at an all time low (and prices are at an all time high).
Will it continue forever? Of course not. We all know that the real estate market is cyclical. As the above factors change, the market will change to adapt. The key point to appreciate is that the so-called experts don't know any better than the rest of us. My philosophy is to hope for the best and prepare for the worst. As of right now, it's still a great time to buy real estate. Owning your own home is not only a major source of pleasure and satisfaction, but a genuinely smart investment. Call us anytime if you'd like to discuss it further.
