Great comments everyone. It is obviously impossible to know where the market will be in the next 5 years but I am pretty optimistic, Specifically about the Toronto real estate market. Yes there are plenty of buildings coming up. But the Toronto real estate market seems to be doing very well and this can be attributed to a few large factors:
- Immigration: Toronto and the GTA get between 80-100 thousand immigrants per year. They may not all be buyers right away, but they will need a place to live. Some will rent, others will buy, regardless, this is a healthy and steady contribution to demand.
- Strong banking system: Of course its not perfect, but when you compare it to the rest of the world, we came out in pretty good shape (relatively of course) in comparison to some of the other major markets in the world. Canada is now perceived to most of the world as a safe haven of sorts. I believe that many of the foreign investors that purchase real estate in canada are not short term investors looking to make a quick buck, but rather investors who fundamentally believe that Canada’s real estate industry will have above average market returns in the long run, with relatively low risk (when comparing to other major real estate markets).
- Rebounding U.S. Economy: showing some signs of life recently, the U.S. economy is still trying to get out of the most dire financial state since the great depression. Make no mistake though, the U.S. will get out of the terrible mess they got themselves in to, and when they do, the Canadian economy will largely benefit from this rebound. It will not happen tomorrow, but likely will happen over the next 3-5 years.
Having said that, I do think that there are plenty of pre-con projects on the market that are over priced. Considering the amount of inventory we have, buyers should now, more then ever, think long and hard before they buy in any particular project. don’t fall for the fancy marketing or a slick sales job. Take into consideration the location, neighbourhood amenities and competitors prices (both pre-con and resale). Make an educated decision about why you are buying in a specific building/location. This will increase your chances of yielding higher returns. If you need a good advice, hire an agent that is an expert in this field. TREB has approx 28,000 agents, but only a hand full of them have the expertise to guide you through this process.