Look up, its a bird, its a plane, No.. its not superman, its our Real Estate Market!
Almost everyday I speak to somebody regarding the Real Estate market in the GTA crashing.
Everybody says to me, wow, I can’t believe that house sold for 200% over asking.
I started my real estate career in a downturn, in 2008, so really that was the last time that the market was in a buyers market situation.
While the market was low, it still didn’t crash at that time. The last time we had a full on crash was the late 80’s and early 90’s.
If you look at the stats for the past 40 years, you will see one thing that is very common; The market goes up and down. While it goes up and down, it has steadily gone up in Toronto.
If you watch news casts and listen to real estate experts, you will be listening to a lot of crap. Nobody really knows or can predict if the market will tank into oblivion.
If you watch movies about the market crash in the U.S. you will see that many people were predicting the market crashing there since 2003, but it really didn’t happen until 2008. That’s a five year difference, and that scenario had the worst sort of ingredients to start that fiasco.
Here is Toronto, the laws are pretty stable, the interest rates and mortgages are not wacky or have a lot of craziness to them, they are pretty standard, and there are no funny business mortgages here. So in that respect, the money is stable. Our laws are for the most part making sure, people who are taking on mortgages can afford them. So that’s a big factor in determining if the market will crash.
While our dollar is tanking big time, bad for oil and subsidiary business, it is great for other businesses such as manufacturing, travel and of course Real Estate.
Unemployment is a big factor in people being able to afford their house correct? While it is up in Alberta, the rest of the country has actually gone down a bit this month. So its bad for Alberta, but here in Toronto, its gone down and held steady.
Market Demand. If you have tried to buy a house in the GTA, you know for the most part you will be in a bidding war situation. The reason being, so many people are coming into the GTA, and staying where they work, they do not want to commute. Plus, foreign buyers, are buying up our cheap Real Estate. Compared to other parts of the world, our prices are cheap. Yes they are. First time home buyers are buying condos, driving up that market as well.
Cheap Interest Rates. Getting a mortgage in Canada is like the banks giving away free money. Yes you pay a measly 2.5% but that is a far cry from the 8% mortgages I was selling. It is harder to get a rental than to get a mortgage these days. If you have some money down, and you have a decent job, you can get a mortgage, regardless of your credit. Yes there are many lenders who are private that will lend to anybody, if you have minimum down.
So, the next time you have your friends over and you start talking Real Estate, and start dreaming of a crash, examine these factors discussed and think again for now!