Having been involved in Toronto’s real estate growth for the past 17 years, as we approach 2020, I would like to discuss the current state of Toronto’s real estate and condo sales, and provide practical recommendations for investment success based on six key points.
Please remember these points well and put them into action, as they can be of great help to your household economy.
1. Canada’s Manhattan, Toronto!!
Toronto is becoming increasingly concentrated as a global technology hub, a center of world investment, and a highly detailed and sophisticated value city where finance, culture, art, trade, and advanced technology are concentrated. With an expected population of 10 million by 2035, it will be the third largest value city in North America, “Canada’s Manhattan, Toronto!!” Until a few years ago, I used to say that the downtown core’s 2-bed condo price of $1 million will soon arrive, but now it has already passed, and soon we will see the arrival of the downtown core’s 1-bed condo price of $1 million.
2. Every year, demand exceeds supply in the very unique and world’s only city, Toronto!!
In April 2014, GBG Group, a famous investment company in the UK, announced “Toronto” as the “most promising long-term real estate investment city in the world”. As such, it has already attracted attention worldwide, and it is a unique city that is growing most dynamically and difficult to find in the world. Every year, high-income, highly educated immigrants and international students flock to the Greater Toronto Area, with a population growth rate that cannot be competed with any other city in the world except Toronto. Consequently, real estate demand exceeds supply every year and is accumulating steadily, for fundamental reasons and market structures that always push real estate prices upward, regardless of economic conditions.
3. Limits of government policies to control real estate prices.
A few years ago, the government succeeded in temporarily suppressing real estate demand through a 15% foreign acquisition tax and mortgage suppression through a “Stress Test”, as the real estate demand soared uncontrollably. However, after a period of adaptation of two years, real estate prices are rising again as trading volume increases. During this time, not only housing but also large commercial properties that were heavily influenced by government suppression policies have been affected. Consequently, the government’s role is limited, and it is impossible to control real estate prices in the long run.
4. Above all, “quick decisions and choices” are the most certain alternative!!
Until now, the key to successful Toronto real estate investing has not been “which real estate to invest in,” but “when to invest?” Unless it is a special case where you plan to purchase a pre-determined property in a certain area due to unavoidable circumstances, receiving a property now and receiving it six months or a year later results in a significant loss in the property price. If the period of hesitation happened to coincide with a time when the property price rose significantly, the loss would be much greater. This was the case 10 years ago, 5 years ago, 3 years ago, and even this year, and it will continue to be the same in the future. As long as Toronto’s high population growth rate continues and construction costs (land acquisition costs, labor costs, material costs, etc.) continue to rise, property prices will continue to rise, and when the real estate market is good, the rate of increase will be much higher.
There are many cases where people keep repeating thoughts such as “has the price risen so much that it can still go up in the future?”, “Is this the last train to catch?”, “This property seems too expensive, should I wait for a better and cheaper location to become available in the future?”, “The location is good, but the price seems too high,” or “The price seems reasonable, but the location doesn’t seem good…” and keep hesitating without making a decision, accumulating losses for years. It is also very common for a condo that was thought to be in a bad location to rise more in price a few years later than a condo that was thought to be in a good location. At this very moment, we recommend that you make a quick decision and choice without delay to create faster and greater investment benefits.
5. Preparing for the future (1-2 years ahead – 10 years ahead) is the most desirable preparation for pre-sale investment.
Canada’s real estate pre-sale system is a very advantageous system for contract holders, as it allows them to pay 10-20% of the property price in 4-5 installments within 1-2 years after the contract is signed, and the remaining 80-90% is paid when the contract is registered 3-5 years after. The contract deposit and interim payments are legally guaranteed, making it a very advantageous system for household asset growth, much like paying an insurance premium (deposit and interim payments) with a small amount of money and receiving a large insurance payout (significant price difference) when the policy matures.
For the purpose of children’s education, college admission, marriage, independence, downsizing of parents, retirement income, and so on, investing in pre-sale properties 10 years ago, 5 years ago, or 2-3 years ago will result in the greatest effect. Especially in Korea, or for families immigrating to this Greater Toronto Area for their children’s study abroad, college, work or other purposes within Canada, it will be the most wise preparation and investment.
If you end up having to buy real estate (condo) without such preparation, not only will you suffer a significant loss from the much higher real estate prices compared to a few years ago, but also face difficulties in preparing a large amount of down payment in a short period of time, difficulties in money transfer, problems with bank mortgages, etc., making it very complex and causing significant economic losses.
If you prepare and get pre-sale properties in advance, everything will go very smoothly, and you will be surprised by the fact that the investment return rate is much higher than expected, which will give you a great sense of pride in your daily life.
6. “Selecting a good real estate agent,” which is easy to overlook, is really important.
In Canada, which has a real estate system and environment that is completely opposite to that of Korea, especially in major cities where many immigrants and international students gather, the “real estate agent” has a very significant impact on the growth of each household economy. That is, the ripple effects of various aspects of daily life associated with real estate contracts and agents can greatly influence the direction and size of household economic growth, even years or decades later, without being visible. If you simply choose a real estate agent easily through some tempting advertisement, there is a high probability that it will come back as a regrettable result for household economy in the future.
My recommendation is to select a “good real estate agent” who has proper professional knowledge and experience, a good reputation, and who can create a portfolio for the current and future of the client’s household and worry and execute it together for the benefit of the customer. A long-term and steady relationship with such a real estate agent plays an important role like a family doctor for family health, and it will bring differentiated and abundant results in household economic size in the future.
I strongly recommend selecting a “good real estate agent,” which can be asserted as the second most important thing after selecting a good spouse.