Lately real estate news has focused on a potential “correction” for the Canadian housing market based on fears of triggering an economic recession. Banks and financial institutions are warning of an impending turn down in the double digit housing price increases, and a potential reversal in home value, meaning home buyers are at risk of being underwater on their mortgages.
Despite these fears, Toronto will continue to be top real estate market in Canada and globally. Attempts taken last year to “correct” the market have yet to impact the home price index, median days on market, or GTA’s housing shortage. Predictions of a downswing in 2015 didn’t happen. Canada Mortgage and Housing Corporation raised premiums on high loan-to-value mortgages and the government increased the minimum down payment requirements for homes above $500,000. None of these change the reality that Toronto is desirable place to live.
A combination of factors ensures the GTA housing market warnings will have little impact. Interest rates are low and likely to remain that way for the foreseeable future. Individuals able to secure a loan are taking advantage of these rates. Furthermore, foreign interest in Toronto housing continues to stay high. These new Canadians are attracted to Toronto’s economic and political stability, high quality education, and the value of foreign currency against the loonie. Recent polls and quality of life rankings place Toronto among the best major cities in the world.
Finally, the driving force in Toronto real estate persists: supply is lower than demand. Toronto’s increasing population is projected to continue an upward trend. Housing of all types is in short supply despite ongoing and new construction projects. In short, new permits are unable to keep pace with the influx of new residents. The lack of supply across all market segments continues to influence Toronto’s real estate more than financial institution warnings and early attempts at market corrections.
People want to live in Toronto. Employment opportunities are drawing residents from Alberta and British Columbia. The city is cultural melting pot attractive to foreign expatriates and new Canadians. Residents enjoy a high quality of life with a variety of entertainment and dining options close at hand. Its high rating in global indexes will continue to draw people to the shores of Lake Ontario.
The Barry Cohen Group is staying updated on the latest developments in the Toronto real estate market. If you are ready to sell or purchase, contact us today.
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