Why would you want to change their minds?
I would say to that person, that they are entitled to their opinion and who knows? maybe they're right.

Real estate is not a short term investment. Buy great locations. Buy great products. The market may go up and down, but in the long run it will continue to go up.
People looking at real-estate as a 5-year investment should be trading stocks.
In any event, I expect modest gains over the next five years in the GTA. We have a strong and solid market, which makes us look good to international investors. We have large yearly growth in terms of population. We have strong growth policies that limit the supply of land.

Marco said:
We have large yearly growth in terms of population. We have strong growth policies that limit the supply of land.

Keep in mind that reports are showing that 60-70% of condos are bought by investors these days. Purchased at prices in the $600-800sqft pre-construction, those investments that hit the resale market in the next 2-3 years are really not going to have the ability to net an amount that makes sense to both the buyer and seller...mainly because the developers are factoring appreciation into their pre-construction price these days. Why??? Because they can....
All we are going to have is a glut of inventory over the next few years.... Where prices will go, nobody knows.

Michael

As a fairly decent technical analyst--stocks--I can say with confidence that any market--be it for real estate or coffee--will go both and up and down over the next five years and beyond....
When the Chinese bubble bursts--and it will--the presale biz will collapse here.
While I don't necessarily believe in 2012 doom, I'm leaning towards the masses taking a pause last half of 2012.....

Michael said:
Keep in mind that reports are showing that 60-70% of condos are bought by investors these days.

this is EXACTLY the issue!
People over leverage themself and then wonder wtf happened.
See the past 5 years south of us, so-called investors were flipping houses like they were burgers at mcdonalds...

Just a quick FYI.... I am not a pessimist about the Toronto market. I am highly doubtful that most of the people buying into the savvy marketing of these condos even know what they are getting themselves into with the product and pricing that is being offered. The days of making purchase decisions rationally have been left back in 2000-2005 when it comes to condos especially.
In 2011, it can be compared to someone becoming a leafs fan ONLY when they actually make it into the playoffs... People love to jump on the bandwagon once things have been proven for them, but they are not really the forward thinking or creative of the bunch and many are not in it for the long term. Rather they are in it for the quick buck. They help inflate prices and give developers the ability to charge more (and profit more) without thinking ahead about what will happen when the party ends and excess inventory has to be filtered out of the system while rates rise and mortgage criteria tighten.
Bottom line....if people don't smarten up, we are gonna have problems.
On a positive note.....the opportunities exist for developers to become creative in the types of units they bring to the table. More families want to move south into places that can provide them with the space and storage of single family house with reasonable affordability, and the really savvy developers have an opportunity to be the first to bring that product to market instead of these 400-600sqft boxes. I am curious to see who will win. My vote is with Minto as I find them the most forward thinking of the developers.
Mike

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.

Yair

Security said:

Michael said:
Keep in mind that reports are showing that 60-70% of condos are bought by investors these days.

this is EXACTLY the issue!
People over leverage themself and then wonder wtf happened.
See the past 5 years south of us, so-called investors were flipping houses like they were burgers at mcdonalds...

I might be wrong but I don't think majority of these investors are not over leveraging themselves. These foreign investors are looking for tax shelters on a "relatively stable real estate and banking system"

Yair said:

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).

and modest returns.
I also agree on the population growth. # of new housing starts vs population growth are fairly in line. I think there will be a transition phase of what "normal/typical" housing options as the GTA matures over time. $2000 rent for a studio apartment in Manhattan is normal today. Young family who lives in the suburbs and have to drive to work on two separate cars sitting in traffic 3 hours a day on a large(r) home vs. a 2 bedroom condo that's a little more expensive (minus the 2 car leases, gas, insurance, maintenance, and average of 3 hrs a day on the road per person).
Condominiums are one of the many real estate products available. Take a step back and look at the Canada in general. The main reason the government is attracting immigrants is to minimize the impact of a significant amount of people retiring (boomers). And it seems that most of the discussion is on the immigrants and their housing needs or at least the money they bring with them. I think there's a great opportunity to invest in medical buildings and retirement service facilities to cater to the older generation. There are other real estate products out there with different markets and potentials.
Richie Yu
www.richieyurealestate.com

I have been thinking a lot about this question recently, especially with all the negative press out there. What do you say to the "real estate pessimists"???
One word: Suckers!
The more and more I talk to the pessimists, the more I realize that they are the ones that have been claiming doom for years and years. They are the ones that never got in the game. It seems that they are actually excited about a crash, because they don't want to be the suckers who didn't make any money.