We are now in the middle of summer. I hope you are healthy and peaceful.
I would like to briefly discuss the real estate market trends in Toronto since last summer and diagnose the future trends. I hope it will be helpful.
Since the tightening of bank loan regulations (mortgage) last summer, real estate transactions in Toronto have significantly decreased in volume in the fall and winter of last year. Prices have remained stable for a few months, but have started to stabilize again this spring and have risen by 5.6% compared to May of last year.
As in previous years, as seen in Toronto over the past decade, most media outlets and the general public have expressed concerns about a significant drop in real estate prices. They have seen a significant drop in real estate transactions since last year, but prices have actually risen.
In fact, Toronto, unlike South Korea or Vancouver, does not experience significant fluctuations in real estate prices due to speculation or national policy errors, and real estate prices will grow steadily due to the influx and mobility of immigrants and ultra-low mortgage interest rates, unless there is a significant global economic shock. Since the low interest rates do not create a significant burden on financial costs, there are almost no properties being released at a lower price, and new development condos or housing construction are suppressed if the supply exceeds the demand.
For those who have delayed or hesitated to purchase real estate due to negative news from the media or recommendations from acquaintances in the past year, I strongly recommend a more proactive and positive approach to the healthy economy and real estate fundamentals of the Greater Toronto Area.
For the past 10 years, real estate prospects presented by the media (especially the banking sector) have always been pessimistic, predicting a decline in real estate due to a bubble. However, contrary to these predictions, the economic foundation of Toronto has been stable and has shown steady growth. This is due to the influx and mobility of immigrants, a healthy job market, and low interest rates.
Every economy has cycles. Typically, there are one-third adjustment periods and two-thirds growth periods. It is evident from the statistics and evidence so far that those who approach these adjustment periods with a proactive attitude reap the greatest economic benefits. However, it may not be easy for the average person to execute such a strategy.
Perhaps the Korean immigrants in Toronto who have not been familiar with real estate transactions here may have been most afraid due to their pessimistic view of the real estate market in Korea.
However, in Canada, especially in Toronto, the economic policies of the Canadian government, the Ontario provincial government, and the Greater Toronto Area have a strong socialist tint, and it is inconceivable that policy mistakes and their execution would harm the preservation and growth of citizens’ assets and cause them pain. The most important core of national economic management is to promote the fair and equal growth of all citizens.
Don’t be afraid and we recommend that you become familiar with real estate in this country for the sake of stable household economies. (Throwing away thousands of dollars (millions of won) a month in rent is the biggest factor hindering household economic growth in Canada, especially in Toronto, and should be the top priority to resolve.)
Even in the case of general existing homes or condos, taking advantage of the benefits of being able to choose good properties well in times like these and purchasing them under good conditions will bring greater profits and stability when entering the normal growth period again in the future.
We also recommend that you actively respond to the pre-sale investment in new condos in the same context. The various incentives given to lower pre-sale prices and contracts than last year will be an even greater opportunity for investors, and the condo market from 2017 to 2020, 4-6 years from now, will be a very good investment tool that will continue to boom and become the mainstream due to Toronto’s characteristics of decreasing family sizes and increasing young immigrants (especially downtown and midtown, which I am convinced will become Toronto’s Manhattan).
We feel that the atmosphere has been getting better since May and we recommend that you actively respond.
We will soon organize more detailed real estate information and economic outlooks and provide our opinions.