There are so many crazy stories about real estate these days; houses selling above asking price, multiple offers and new condominiums selling out overnight. The average selling price in the GTA was $501,614 in March – up 10% in comparison to March 2011. It is no wonder people get confused and concerned about the future of the real estate market. The fact is that real estate is much in demand, but for good reason. Let me review some of those reasons for you.
First and foremost, let’s remember 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. Our doors are open to new immigrants, and up to 300,000 per year are settling in Canada with the majority in Ontario. Those immigrants with money to invest in real estate and business endeavors are preferred by Canadian Immigration Services, and thus real estate comes under greater demand as new immigrants often buy where previous generations would have rented.
Secondly, our economy is very strong with many jobs and opportunities. As Toronto and the GTA have grown in population, services, restaurants and stores have expanded to meet the new demand.
Third, our interest rates are at all time lows, making homeownership more affordable than ever before.
The fourth factor is supply. Immigration is outstripping new construction efforts, and builders cannot build fast enough to supply the demand. The supply is tighter still as very few rental units have been constructed since the 1970’s. Houses and condominiums are being used to generate rental income and are taken out of the supply inventory for those interested in purchasing. Combined with the fact that the GTA is limited in growth south due to the lake or north due to the Oak Ridges Moraine, you can now appreciate why supply is at all time lows.
Will it continue forever? If the above factors change, the market will change. If the interest rates go up, if immigration slows down, if, if, if. Know one knows, and everyone has 2 opinions. My philosophy is hope for the best and prepare for the worst. Should one buy? Definitely! Owning your own home is not only a major source of pleasure and satisfaction but it is generally the only source of retirement funds for the average Canadian. So buy, but plan on higher interest rates should they occur. Purchase a rental home provided it creates no financial pressure on you. Populations always grow and people must live somewhere!
There are over 34,000 real estate agents who are members of the Toronto real estate Board. As real estate heats up, more people enter the industry. Last year, about 26,000 sold fewer than 8 homes (about 7,000 did not sell 1 house in 2011). It is critical to have the right person on your real estate team. I hope you have made me your person! Please feel free to call me should you have any questions and I truly appreciate your referrals!
Have a great April!
PS. So far, over 21,000 homes have been sold in 2012. We are 9.2% above 2011’s numbers and on pace to the busiest year ever for real estate in Toronto.