Friday, October 20, 2017

Toronto’s Impending Real Estate Bubble ?…. Sorry Hate to Burst your Bubble….

Pundits and so called experts have been predicting a crash in the Toronto Real estate market for well over a decade now. These claims appear to be more based on selling newspapers and advertising then based on fact. If one were to look at the facts , the facts paint a much different picture than all the recent doom and gloom portrayed in the media.

The Toronto Real Estate Board reported 4,337 transaction’s for the month of January 2011. The result was 13 percent lower than January 2010. When one reads this immediately it appears to be the sign that we are finally at the end of the road. The report however goes on to state that despite the drop in transactions the average sale price for a home in the GTA was $427, 037, which represents an increase of over four percent compared to the prior January. In essence prices are going up because there is not enough supply. It’s basic economics 101 , supply and demand.

There has also been talk over the impending crash of the condo market due to over supply. Lets take a look. Completions of new condos in Q4 have lead to an increase in new units entering into the market place. The Toronto Real Estate Board reports that there was a 25% percent increase in the number of condominium apartments listed for rent on a year over year basis . However the report goes on to state that the number of rental transactions for condominium apartments increased at an even great rate of 29 percent. Demand is outstripping supply. Furthermore rental prices for popular one bedrooms have increased by 2.1 percent and 2.6 percent respectively compared to the last four months in 2009. Much like the resale housing market the condo rental market is also tightening, not contracting .

According to Realnet data a shrinking supply coupled with an increasing demand points to a shortage of new homes in the GTA’s future. Realnet projects the strain is expected to emerge in 2011 and full be manifested by 2014. It is projected that based on the current levels of immigration into Toronto between 130,000 -140,000 annually, the GTA will need to create 40,000 new homes per year just to keep up with current immigration levels ….. something to think about for sure.

The next time you read or hear the next person claiming the market is about to crash ……. think again !

Or for that matter simply just start thinking !!

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