Should You Invest In Toronto Real Estate In 2016 - What The Pundits Are Saying
The last recession in the real estate market in Toronto was in 2008. Since then, the market has shown slow but sure recovery with real estate prices rising steadily over the last five years. The residential housing market in Toronto is on an upward swing. According to real estate pundits, there is every reason to invest in Toronto housing now for the discerning real estate investor or a first-time home owner. Here are the reasons why.
Toronto residential market is a safe bet for investment
Toronto along with Vancouver leads the Canadian real estate market in showing a steady increase in prices that show no indications of a downward spiral at the moment. 2015 was a good year for the real estate market in Toronto and there is every indication that this trend will continue in 2016 as well. Toronto and Vancouver together have shown 75 percent of the nation’s job growth since 2014. Moreover, Toronto has seen a rise in population demographic share of people in the age group of 30 to 40 years. This is the age, where there are maximum first time home buyers. This makes the forecast for 2016 optimistic on real estate growth continuing into 2016.
There is some feeling that the growth will be slower this year. This is because the market has already shown so much rise in prices already. However, some pundits feel that this will probably hit the markets in 2018, not as soon as 2016.
Can there be a bubble burst in Toronto real estate?
We have seen real estate bubble burst in recent times in many American and European cities. We also saw it happen in Toronto in the early 1990's. In such economic environment, it is natural for the question to arise- can something like this happen in Toronto? Considering the current conditions, the answer is No.
Real estate bubble burst happens when there is an artificial demand created in the market not on user basis, but purely for reasons of speculation. Unhealthy sub-prime loans and credit policy of banks add to the propensity of the markets to be saturated by a speculative demand that is fickle by nature. In such a situation, any bank or credit crisis, rising unemployment rates or inability of buyers to invest in real estate, leads to a sudden crash in the market. When this happens, bank recoveries become a problem, mortgages are surrendered and inevitably real estate prices come crashing down.
The reason why something like this is not going to happen in Toronto is that there is a real demand by first-time property owners or families. The Toronto market is more friendly to first-time buyers and the deals that are usually offered to them by the property developers is indicative of the fact. Even $1 million homes are being offered to them with good deals. This is ensuring the healthy demand-supply balance that is not speculative in nature. Bank loan policy is steady and there is no sudden increase in interest rates to scare away first time homeowners who depend on mortgage to buy property.
2016 has already started on a good note
The sales for January and February show sales of properties at prices over and above listing prices. This is more prevalent when the properties are sold to the highest bidders. This is indicative of the interest of home buyers in the beginning of the year and a general feeling that the property prices may rise in the coming months.
According to pundits, there is still reason to cheer in the real estate market growth of Toronto. Now we just have to wait and watch how much of their predictions will come true.
RE/MAX All Stars Realty Inc