Despite the opinions of many people, the housing market within the GTA has yet again produced a solid year of returns, without a correction.
The annual predictions for 2015 typically feature high percentage of doom and gloom forecasts for the Canadian real estate market. Headlines or media stories are more enticing if a meltdown or a correction is forecast. Even respected people like the Governor of the Bank of Canada, Stephen Poloz, says that the Canadian real estate market is over-valued by as much as 30%. We have heard this story before, almost every year in the past 15 years. Hasn't happened yet, and it won't happen in 2015.
Here's why according to Mark Weisleder, a popular speaker and real estate lawyer in Toronto.
1. Interest rates will likely stay low in 2015
The record low interest rates that Canadians have enjoyed for the last several years will likely continue in 2015. Although the Canadian government cannot directly control interest rates, you can bet that with an election coming up in the Fall of 2015, the government will use all tools at its disposal to ensure that there is not a real estate meltdown that they could somehow be blamed with.
2. There is no not enough land to build new homes in GTA
As a result geography, with the Lake Ontario to the south of the GTA and the protected Greenbelt and the Lake Ridges Moraine to the north, there is not enough land available for the needed new home construction to take place in the GTA. As a result, we see many more high-rise condominiums being developed, in order to handle the demand of both first time buyers and immigrants who continue to make the GTA one of the world's most sought after destinations. They say that real estate is all about location, location, location. Never forget that we are privileged to live in perhaps the safest, most stable location in the world, right now, with all the resources that the world wants and a growing economy. All of this will contribute to the value of homes in the GTA, especially low rise homes, to increase in value next year.
3. Compared to the rest of the world - Canadian real estate is still a bargain
If you look at the prices people pay for homes in New York, Hong Kong, Tokyo or London, England, by comparison Canadian real estate is still a bargain. This is why so many foreigners continue to buy up real estate in Vancouver and Toronto, as they consider this a very safe place for both their children to come and study in university as well as for their own investment needs.
4. Scarcity of available listings in the GTA will continue
One of the reasons we continue to continue to have bidding wars in the GTA is simply because fewer homes are put onto the market. This has been more evident during the past two years, but is a consistent theme during all spring markets. One of the reasons is that people do not wish to move up or downsize because of the double land transfer tax hit in Toronto. Many people would prefer to stay in their homes and just do the required renovations to retire there, whether building an elevator or a place for a live-in caregiver.
Fewer homes on the market or MLS will continue to drive prices higher next year. Additionally, many people want to move, perhaps from a house in Whitby, to a newer house in Brooklin, but these potential buyers are unwilling to list their current house for sale, because they may not find a suitable house. This removes inventory for the market and forces many people to become watchers, instead of sellers who list and sell, then buy something available on MLS.
5. Even the doomsayers admit that if the market does fall, it will be a soft landing
In almost every doom and gloom analysis, the authors, including Stephen Poloz, admit that at most, there will be a soft landing in the real estate market next year. Let's be real. 30% over-valued does not mean a soft landing. This admission is almost proof that the doom and gloom writers want to have it both ways, so that if they are once again proven wrong about the real estate market, they can state that it was a "soft' landing.
If you are able to afford to enter the real estate market in 2015, enjoy the ride. Remember, with real estate, it is not just an investment in your future, it is about a home to build a family and memories for years to come, in one of the greatest metropolitan cities in the world. As the GTA continues to grow and attract people from all over the world, the appeal of local real estate will continue to offer homeowners a great return on their equity.
If you are looking for a house in Durham Region, including desirable municipalities like Whitby and its fine neighbourhoods like Williamsburg, Somerset Estates, Fallingbook, Brookwood, Otter Creek, Pringle Creek, Downtown, Rolling Acres, or Whitby Shores, I can help you. Brooklin offers great designs, appealing neighbourhoods and newer houses that are attracting many people from Toronto. With Highway 407 opening in 2015, Pickering, Ajax, Whitby, Brooklin, Oshawa, Courtice and Bowmanville, will all become far more accessible and their prices will continue to appreciate.
Are you are interested in buying a home in Durham Region? Let me show you how twenty-five years of local experience can make your home buying experience rewarding and worry-free.
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby