Why and How you ask? … Take note of the following points:
1. A strategic shortage of supply: Reports from the Real Estate Council of Ontario published the lowest number of residential listings in the last 20 years, despite the average house tripling in less than 20 years. Please note the Average Price Annual Percent Change Chart. (Toronto Real Estate Board)
Potential vacant land for developing, which is either within an hour-commute or in close proximity to public transportation lines has been in very short supply for years. Mississauga has recently announced that their waterfront projects will remain on-hold for several years. In addition, recent prices of $900,000/acre in the Western G.T.A confines potential land for developing additional dwellings. The dynamics of housing is rapidly changing, which is being assertively mandated by the province.
2. Historically, modestly rising interest rates have created affordability issues and therefore have generated more sales in the housing market. This increase in sales (demand) has resulted in higher prices. Rising Demand vs. Diminishing Supply… this imbalance is veering away from an equilibrium price, creating an upward trajectory price line though 2017.
3. Foreign property investment will continue to be a major factor pushing prices upward; Presently there are 70 million refugees world wide striving for a safer place to call home. Rest assured, not all refugees are penniless, under educated or religious zealots. The Coptic Christians of Egypt and St Thomas Christians of Syria (Nasrani) best exemplify the popular opposite of the often ill-conceived image of todays “displaced”. These 2 groups within their respective countries have for over 2,000 years filled a most needed professional void within their societies. Now, due to political and religious distress, many have been violently ejected from their factories, professions and homes. They are finding Canada’s urban centres a primary focal point for relocation.
Chinese foreign property investments have increased with more than $250 billion net outflow. Due to political and social tensions in countries around the world, (ex. Brexit, Rising Populism in Europe and the new US approach to immigration) Canada has become by default the country of choice for entrepreneurial nomenclature investment. Russia and China remain totalitarian states despite all the lovey-dovey rhetoric espoused by their Supreme commanders. Money is still liquid despite the ever-growing governmental persuasion to move to a cashless economy. Much of this money is now circulating in Canada’s direction. Our relatively lower Loonie is also helping this trend.
4. Equity markets will remain volatile. Stock markets have risen approximately 6% since early November while some financial equities have risen more than 50%. These increases have occurred despite the promises of massive tax reductions south of our border and the enormous hubris about new gigantic infrastructure projects. Talk remains cheap, especially when it originates from the world’s newest and greatest reincarnation of PT Barnum. Political acrimony has not disappeared overnight, plus the United States, as most western nations, are beset by innumerable systematic issues. Believing that the Trump Land equity market roller coaster only rises is beyond naïve. Real Estate remains in the minds of most as a conservative and tangible way to venture financially forward in a tempest-tossed world.
Large hedge and pension funds take this populist mentality of riding the new super charged equity market rocket for granted. Please examine the facts, they are constantly investing in large-scale development projects in noted urban centres or placing multiple bids on iconic buildings in the same said cities. Canadian cities with their expanding public transport systems, stable political system and our envied legal system are slowly being lauded world-class status. Perhaps in the foreseeable future, Toronto, Vancouver and Montreal will compete with New York and Los Angeles on an equal basis for these trillions of investment dollars.
5. The province of Ontario has repeatedly forecasted that the population of Toronto will be nearly 9 million by 2035 (Greater Toronto Marketing Alliance). That is a rise of more than 42% in just under 2 decades from now. How things are going to change…
**There is little doubt that we live in an interesting time! If you would like to further information about property values, call 905-838-2490 for a confidential conversation.
Information sourced from:
Source: Toronto Real Estate Board. (November 9, 2016) T.R.E.B Housing Market Charts. Received from: http://www.trebhome.com/market_news/housing_charts/index.htm
Source: Greater Toronto Marketing Alliance. (July 2011). Population Forecast and Growth Rate. Received from: http://www.greatertoronto.org/why-greater-toronto/economic-overview/population