As the COVID-19 pandemic continues to prolong, the real estate market in Greater Toronto Area and its suburbs is heating up. At this point, it is crucial to prepare and respond to how the real estate market will develop during and after the pandemic, and what preparations should be made for it. I have prepared a question and answer format to provide an overview and coping strategies.

Please refer to it carefully, and I hope it can be helpful for each household’s economic growth.

Table of Contents:

1. What is the current state of the real estate market in Greater Toronto Area and Canada as a whole?
2. What are your opinions on the future outlook and investment direction of the real estate market in Greater Toronto Area?
3. Over the past 20 years, the real estate market in Greater Toronto Area has steadily increased without significant fluctuations. What are the reasons for this?
4. Among the methods of acquiring real estate, such as buying and selling, leasing, and pre-construction condo, which method is recommended as an investment?
5. What are the most important factors to consider when planning to purchase (invest) in real estate in Greater Toronto Area as an ordinary person?
6. When is the best time to invest in real estate?
7. What are the criteria for selecting a good real estate agent?

1. What is the current state of the real estate market in Greater Toronto Area and Canada as a whole?

• You will remember the skyrocketing housing market in the Greater Toronto Area from the fall of 2016 to the spring of 2017. Although Toronto itself is experiencing a slightly less extreme trend, the suburbs are currently seeing a similar surge.
• In order to recover from the economic impact of COVID-19, many countries around the world have dramatically increased their monetary supply, which is expected to lead to inflation and a natural rise in the value of tangible assets such as real estate.
• In particular, the Greater Toronto Area is a city of immigrants with a population growth rate that greatly exceeds the supply of new housing units every year, so the real estate market always moves before the economy in daily life. This time, there is a popular desire to predict and purchase real estate before its value increases, which is driving up prices.
• However, this upward trend is expected to continue for a considerable period of time, not only in the Greater Toronto Area but also in the suburbs that are perceived as more affordable. The ripple effect is spreading to smaller cities across Canada.
• It will take a long time for the general public to feel confident that the COVID-19 pandemic has ended, and the demand for suburban housing is expected to continue for a considerable period of time.
• Before COVID-19, there had been a greater increase in housing prices in major cities such as Toronto and Vancouver, but this time the trend is different. Prices are rising significantly not only in major cities but also throughout Canada, resulting in an overall price upgrade for everyone.

2. What are your opinions on the future outlook and investment direction of the real estate market in Greater Toronto Area?

• After the real estate value of Canada as a whole is upgraded, it seems that there will be no significant changes for a while. However, once there is a firm belief that the COVID-19 pandemic is under control, demand will revive more in the central areas rather than the outskirts. If this happens, pressure for price increases in the central real estate market is expected to rise again.
• If you are choosing between the central and outskirts areas for investment or residency purposes, it may be necessary to be more cautious.
• Preference for the central areas, which have better infrastructure for daily life, education, culture, health, and other conveniences, and the relatively weaker outskirts has been significantly differentiated in the traditional immigrant city of Greater Toronto.
• If our daily life returns to normal similar to before the COVID-19 pandemic, demand for the central areas is expected to increase again compared to the outskirts, and the price difference between the central and outskirts areas, which has narrowed during the pandemic, is likely to widen again.
• Usually, the real estate value of the outskirts, which was around 50% compared to the central areas of Greater Toronto in the past, has recently increased to 80-90%. However, it is highly likely that it will be adjusted downwards by at least 60-70% as time goes by.
• If that happens, one of these three options may occur: 1) the central areas rise while the outskirts remain stagnant or decrease; 2) both areas rise, but the central areas rise more than the outskirts; 3) both areas decrease, but the outskirts decrease more than the central areas.
• Whatever the situation may be, the favorable side is likely to be the center, while the unfavorable side is likely to be the outskirts.
• Lately, many small and medium-sized cities in the outskirts outside of the Greater Toronto Area have seen a significant increase in real estate prices. During such times, many households who have been planning to move to or invest in the Toronto area, but have been unable to do so due to the large difference in real estate prices, are now selling their properties in the outskirts that have greatly appreciated in value and purchasing or receiving pre-construction condos of real estate in the central Toronto area or nearby areas that have not yet greatly appreciated in value. This is a recommended method.
• On the other hand, since real estate in the outskirts is currently rising sharply, some people are considering purchasing and renting out properties in the outskirts before they rise even further. In the short term, this may be a good strategy, but in terms of long-term return on investment, it may not be strongly recommended.
• If we were to provide recommendations for residence and investment, after the COVID situation has clearly settled down, we expect that purchasing or pre-construction condo of real estate in the central or nearby areas, rather than in the outskirts, would be more stable.
• Additionally, the prices of houses and townhouses have been rising significantly lately, and if this trend continues, the price difference between houses and condos is likely to become even greater. However, if immigration and foreign student population increases again in the future, demand for condos may rise again, and there is a high likelihood that condo prices will increase even more, similar to the condo boom that happened a few years ago. In this case, condo purchasing or pre-construction condo purchasing in the center or nearby areas ahead of time may be a good investment strategy.

3. Over the past 20 years, the real estate market in Greater Toronto Area has steadily increased without significant fluctuations. What are the reasons for this?

• There are several clear reasons, but the biggest reason is that the number of people who want to buy real estate is much higher every year than the number of new properties being built or put up for sale.
• In typical cities, real estate demand is determined by natural population growth and decline due to births and deaths, as well as migration in and out from other regions. However, in the Greater Toronto Area (GTA), in addition to this, there is an annual increase of 150,000-200,000 people due to immigration and study abroad. This number is truly remarkable. The demand that greatly exceeds the supply of new construction and existing properties accumulates as annual pent-up demand, leading the GTA real estate market to rise in price along with low mortgage interest rates.
• The real estate demand and excess demand in the GTA area goes beyond common sense. According to general economic principles, when mortgage interest rates rise, real estate demand decreases, and real estate prices come under pressure to fall, but during my 19 years in the real estate industry, there have been several occasions when mortgage interest rates rose to over 5%, and real estate prices did not fall or even temporarily slump. In fact, there were several occasions when the increase in real estate prices was much higher than during the period when interest rates were lower.
• This shows that the demand for real estate in the GTA is much higher than we think.
• The biggest surge in real estate prices occurred in 2016-2017, and in order to prevent this surge, the government introduced a 15% foreign acquisition tax and mortgage stress tests, which had some effect in adjusting the market. The government’s actions were evaluated as very appropriate.
• Unless the Canadian government declares a halt to immigration, the real estate market in Toronto, the economic capital of Canada, will continue to grow more than any other city.
• I often say that Toronto will surely become Canada’s Manhattan, and the era of Toronto’s central condos reaching $1 million for a 1-bedroom unit is not far away.

4. Among the methods of acquiring real estate, such as buying and selling, leasing, and pre-construction condo, which method is recommended as an investment?

• If you are planning to invest in real estate with the spare funds you currently have, the best way to get the biggest profit for your investment would undoubtedly be through the method of “pre-construction condo” purchases. Even after reviewing my 19 years of experience in real estate multiple times, I believe that this has been, still is, and will continue to be the case.
• Many people may think that the investment effect of “pre-construction condo” purchases is diminished since pre-construction condominiums (townhouses) tend to have higher prices than the existing condominiums (townhouses) in the surrounding area. However, in the case of “pre-construction condo” purchases, some of the expected high Assignment prices that are anticipated four to five years after registration are already reflected in the pre-construction condo price. Therefore, the pre-construction condo price can be higher than the current Assignment price of the surrounding existing condominiums, and there are many factors, such as the leverage effect of investing with less than 1/5 of the total pre-construction condo amount, the fact that newly built condos constructed by reputable construction companies tend to have significantly higher market values than existing condos in the surrounding area after occupancy, etc. These factors result in a price differentiation with the surrounding existing condos after completion. I could go into more detail about this if another opportunity arises.
• Secondly, there is also a considerable investment effect in the “Assignment” method. However, this method requires the original pre-construction condo contract holder to pay the entire remaining down payment and a premium, which can be a significant initial burden, but if the conditions for obtaining a mortgage are met, it is possible to adjust the premium to be paid at the time of registration, which can greatly reduce the initial burden.
• Most people do not know whether the Assignment price is cheap or not. This is because Assignment properties cannot be advertised on the Toronto Real Estate Board’s MLS website and are only traded between brokers. However, the Assignment price varies greatly depending on the remaining occupancy date, but generally, if the Assignment price is similar to or lower than the surrounding existing condo Assignment price, it can be considered a good deal, and the investment effect is much higher than purchasing an existing condo. (If you plan to sell or purchase through Assignment, you can refer to my website for Assignment properties.)
• Finally, there is the most common method of real estate transactions, which is the traditional sales method. Among these, home sales are important in terms of their location, but what’s even more important is an accurate valuation of each individual property. If a property is analyzed incorrectly, there is a high likelihood of suffering a great loss, especially since homes like condos with the same size, structure, and conditions are almost nonexistent in the surrounding area.
• For those who are inevitably renting, we recommend planning to keep the rental period as short as possible and making efforts to purchase the property as soon as possible.
• For those who cannot prepare the down payment for a real estate purchase in a short period of time while living in a rental property, we strongly recommend trying to obtain a pre-sale contract.
• Even while living in a rental property, obtaining a pre-sale contract for a real estate purchase can be started with a small amount of money, and it can be a very wise investment method where you can sufficiently compensate for the increase in real estate value that you may lose while renting, and still come out ahead.

5. What are the most important factors to consider when planning to purchase (invest) in real estate in Greater Toronto Area as an ordinary person?

• If you’re planning to purchase (invest in) real estate, the first thing you need to do is gain some knowledge about real estate. You’ll need to make an effort to learn about procedures such as pre-sale, sale, and Assignment, taxes, finance (mortgage), local information, and other basic matters through various media or with the help of experts in each field.
• Secondly, even if you have some knowledge about real estate transactions, you still have a good chance of making a bad decision when it comes to choosing and investing in real estate. Therefore, when deciding on the final target property, it is highly recommended to seek the deep help of a real estate professional to increase your chances of success.
• To achieve the best results and find the most reliable real estate agent, it is essential to establish a mutual trust relationship between you and the agent. When customers trust a reliable agent, the agent will feel trusted and grateful, leading to a dedication to work for the customer’s benefit and ultimately finding the best target property that meets their needs.
• If I were to explain one good method easily, it would be to first find a specialized real estate agent that suits you, and then share with them all the information they want to know about you and all the things you want from them without hiding anything. Then discuss with them and say, “I trust the real estate you recommend and will leave it entirely up to you to find the best real estate that suits me. Please think of me as your family and help me find the best real estate.” Then the agent will surely do their best to find the best property and satisfy you 100%.
• Even if you have not studied or experienced it, by entrusting the work to a specialized real estate agent that you have not paid any money to, you can easily and inexpensively gain knowledge, experience, and know-how about real estate that the agent has accumulated over decades. This can be one of the best ways to achieve the best results in real estate investment.
• If I were to move to Vancouver or consider pre-selling for investment, I would do it in the same way as described above. Rather than searching for information about Vancouver’s pre-selling condos on the internet overnight, sorting it out for several days, and asking around various real estate agents, I would first find out who the most professional and reputable realtor is in Vancouver. Then, after selecting the realtor, I would tell them all about my situation and entrust them with the work as described above. Although I am also a real estate agent, I do not know Vancouver well, so if I take the lead, the probability of failure is very high. By having the person who knows the most about Vancouver real estate investment do it for me and make the best choice and progress that meets my desired conditions, I will ultimately benefit the most.
• These days, it is easy to access real estate information and advertisements through the internet or social media. In particular, when looking to purchase (or invest in) real estate in Toronto as an immigrant or student who has recently arrived, or in other cities in Canada or even in Korea, most people will rely on the internet, acquaintances, or real estate agents who advertise to obtain real estate information. They will then gather various pieces of information and make their own decisions based on their analysis.
• While some decisions may lead to smooth and successful transactions, there are risks associated with relying on the internet for information. There may be dishonest or misleading commercial information or various ads that can be confusing to navigate. If you inadvertently miss something important while filtering out and selecting the right information, there is a high likelihood of making a costly mistake. Real estate deals involve large sums of money, so even one mistake can have a significant impact on personal finances. Therefore, it is important to be cautious.
• In addition, even if you have chosen the right condo based on all the information available to you, including the internet and various real estate agents, the success of your investment in pre-construction condos depends on many factors that may be outside your control. If there is a mistake in any of the many related factors that you were not aware of during the subsequent process, even one mistake can significantly affect the final investment return. Therefore, it is important to consider the professionalism, attitude, and approach of the realtor who assists you during the entire investment process.

6. When is the best time to invest in real estate?

• The best time to buy real estate for investment purposes in the Greater Toronto Area (GTA) is always “as soon as possible,” unless there are temporary special circumstances such as the 2008 global financial shock in the United States or the 2017 foreign acquisition tax measures in Toronto. It is difficult to distinguish between peak and off-peak seasons, and nowadays, such distinctions have become increasingly blurred to the point where it is reasonable to say that there is no distinction.
• “Which real estate to purchase” is important, but “how quickly to make a decision and execute it” is far more important. This is a recommendation that cannot be emphasized enough, but for those who need to make a decision, it may not be easy to execute it properly.
• Nevertheless, it is recommended to make a decision as early as possible and make an effort to execute it. If you are considering purchasing a real estate property but cannot make a decision and delay it to the next opportunity, you may lose 5-10% of the purchase price at that moment. The timing of the decision is critical because once the decision is difficult and delayed, the next decision can also be delayed easily, and this delay can continue for six months, a year, or even longer.
• If the decision is delayed, the purchase price will naturally become much higher than expected in the GTA’s reality. Expectations that waiting will yield cheaper and better real estate can be the biggest obstacle to making a decision. However, it is very difficult to expect to find cheap and good real estate in Toronto.
• For example, if a real estate agent mistakenly lists a property valued at $1 million for $900,000 on the MLS, you may think that the property is a good deal and you can make an offer to purchase it. However, within a few hours, numerous offers will compete, and eventually, the property will be sold for $1 million or more. It is a real estate market where sellers can only receive their expected value and buyers cannot buy real estate at a lower price, even if they want to.
• Even though there are currently good opportunities to purchase pre-sale condos (townhouses, houses), many families are waiting, thinking that there will be even cheaper and better opportunities in the future. However, the chances of a perfect opportunity that meets their needs coming up in the near future are not very high.
• Based on my 19 years of real estate experience, I have found that the highest probability of investment success lies in choosing and immediately executing the purchase of a condo (townhouse or house) with the help of an expert.
• When it comes to selecting a pre-sale condo, it’s almost impossible to find one that satisfies all of the conditions that most people expect, such as a good location near the subway, a low pre-sale price, a great view, good interior design with southern exposure, a reputable construction company, and various indoor facilities. Even if you can satisfy 80% of your expectations, it is still a good condo to be proud of and can be an excellent choice for success, which has been proven through my experience over the years. It’s not guaranteed that larger condos will yield higher investment returns.
• While it’s possible to make a well-planned decision when new condos are released, in many cases, the pre-sale price feels higher than expected, and the interior design, condo facilities, view, and other factors may differ from what was anticipated, leading to disappointment and difficulty making a decision. Additionally, there may be changes in personal circumstances or environmental changes that make it difficult to proceed while waiting. When this happens repeatedly and time passes, it’s common to give up on the pre-sale or make a decision at a lower level than originally planned.
• The cost of land acquisition, construction labor, construction materials, taxes paid to local governments, and expenses all rise every year, and the rate of increase has been growing lately. As a result, pre-sale prices will continue to rise.
• If the economy worsens, construction companies will not postpone pre-sales and reduce prices because they will incur losses. Regardless of economic conditions, pre-sale prices will rise.
• Even for the same type of condo (townhouse, house), the prices of the remaining units tend to go up over time. The larger the demand in the housing market, the faster the prices increase.
• Therefore, there is a high probability that delaying the decision to buy can result in significant financial losses for household economies without even realizing it.
• We strongly recommend seeking the assistance of a reliable real estate agent and making a decision as early as possible through beautiful communication based on mutual trust. This will greatly benefit your household economy.
• In particular, purchasing real estate in preparation for moving to the Toronto metropolitan area from other cities in Canada, for children’s education or work, or for investment purposes should be done through pre-sale as it can be more profitable in many aspects than waiting until the actual move.
• Furthermore, the price difference between small Canadian cities and the Toronto metropolitan area has been increasing over time. For families who immigrate or study abroad in small Canadian cities when their children are young and plan to move to Toronto when their children go to university, waiting for that period can result in a significant increase in the value of real estate. If you pre-purchase the property much earlier, you can reduce or even eliminate the potential financial losses due to the difference in real estate prices over that period, and in some cases, you can even gain more profits. So please consider this carefully.

7. What are the criteria for selecting a good real estate agent?

• In a household, real estate transactions involve amounts that can range from tens of thousands to millions of dollars, which can rival the value of one’s entire assets. Such transactions usually begin with a real estate agent who is new to the client, and they are a significant and important event in one’s lifetime. If the transaction is started correctly and proceeds in the right direction, one’s assets can significantly increase. However, if it does not go well, one’s assets may decrease, or one may encounter unexpected difficulties.
• In Korea, both clients and real estate agents are familiar with the information about the target property and the real estate transaction process, so the process of viewing and contracting real estate is straightforward and not very difficult. However, Toronto is entirely different.
• In Toronto, the role of the real estate agent is crucial. To provide practical assistance in determining the customer’s residence (investment) in an immigrant city, the real estate agent must, in essence, become an expert on everything, like a jack of all trades. In addition to basic English proficiency, they must have extensive knowledge of all information related to immigrant residents’ living convenience facilities, such as regional residents’ living situations, school districts, transportation, health, and leisure facilities. They must also have extensive knowledge of economic laws, taxes, financing, mortgages, investments, and home maintenance, along with an organic network, all of which are essential for all customer support.
• During the property selection process, the real estate agent becomes even more critical. Even when selecting among multiple properties or considering the same property, different real estate agents may have different opinions on which model or unit is more valuable, which can significantly affect the investment effect later on.
• Even during the contract process, at each step, there may be many pitfalls and benefits that can intersect with the client’s interests. For example, even if a customer receives the same condo for sale, the economic benefits and losses can significantly differ depending on their agent. The real estate agent’s ability to complete the entire process, from contract negotiations to subsequent Assignment, leasing, and registration, and to ensure that the client receives maximum benefit, is also essential.
• If you find a real estate agent with professional knowledge and a strong network, whom you can trust for everything from contracts to future transactions such as subletting, leasing, or selling, and who also values your interests as the top priority and has a good social reputation, then they could be the best choice for you.
• In the metropolitan city of Toronto, where immigrants settle, the role of real estate agents is significant, and they have a subtle yet substantial impact on personal economic growth and scale. If you select an agent based on the request of a friend or relative or due to commercial temptation, it may seem beneficial at first, but there is a high possibility that you will realize that you have suffered significant losses over time.
• Since I started in the real estate industry, I have often said, “Selecting a good real estate agent is the second most important thing after selecting a good spouse.” This still holds true in Toronto, and I believe it is even more important these days.