Dearest readers, the news came out not too long ago, but it still resonates with me- the Toronto housing market is slowly bouncing back. Gosh, that didn't take long. The much-touted meltdown may have been overstated. Oh, and let's not forget the issue affected mostly detached homes- the condo market has not really gone through any noteworthy problems at all :) All of this, of course, after years of predictions that the Toronto (and Canadian) housing "bubble" was going to burst at any moment. What I'd like to go over is a perspective on what I see as the secret (or not so secret; you decide) power of the Toronto area real estate market because it's such an important part of our economy, and is consequently worth thinking about regardless of whether you're looking to buy or not. In this post, I'll go over the good news about the housing market bouncing back, explain the perspective I wish to present here, and then provide information that made me form that perspective. Read on, it's worth it ;)
According to a Globe and Mail article from early October, the worst of the Toronto housing market correction is over. The average price of homes sold is up, and so is the number of new listings. This is very good news because, after all, a market can only go up or down- it never stays the same. Having said that, I am glad it's starting to go back up again even if it makes affordability more challenging, simply because I dislike the alternative- market going down.
One thing this beginning of recovery demonstrates is that the new rules introduced that affect foreign buyers have had a slightly cooling effect- far from a market chill. The foreign buyer tax may have deterred some smaller players from purchasing property in Toronto. On the other hand, the wealthier and keener real estate investors may have gone red in the face, looked around elsewhere in the world, and then decided to buy in Canada regardless of the tax.
That last sentence, my dearest readers, is at the core of my perspective on the Toronto area real estate market- investors want to buy properties here because there are less and less real estate markets in the world that are as good, as safe and as promising as the Toronto area, and Canadian market as a whole. Those who came up with foreign buyer tax have not researched what alternatives a real estate investor would have around the world that compare to Toronto, and how keen that investor would be to still buy in here after all. Let's go over a few bullet points:
According to a Globe and Mail article from early October, the worst of the Toronto housing market correction is over. The average price of homes sold is up, and so is the number of new listings. This is very good news because, after all, a market can only go up or down- it never stays the same. Having said that, I am glad it's starting to go back up again even if it makes affordability more challenging, simply because I dislike the alternative- market going down.
One thing this beginning of recovery demonstrates is that the new rules introduced that affect foreign buyers have had a slightly cooling effect- far from a market chill. The foreign buyer tax may have deterred some smaller players from purchasing property in Toronto. On the other hand, the wealthier and keener real estate investors may have gone red in the face, looked around elsewhere in the world, and then decided to buy in Canada regardless of the tax.
That last sentence, my dearest readers, is at the core of my perspective on the Toronto area real estate market- investors want to buy properties here because there are less and less real estate markets in the world that are as good, as safe and as promising as the Toronto area, and Canadian market as a whole. Those who came up with foreign buyer tax have not researched what alternatives a real estate investor would have around the world that compare to Toronto, and how keen that investor would be to still buy in here after all. Let's go over a few bullet points:
- The glamorous world of Miami real estate and those amazing beachfront condos has sadly been awash with investor insecurity after the winds and the floods. So, Florida and California are out for many investors. Toronto area has never (in the time period that matters for this topic) experienced any similar calamities.
- Europe is dealing with Brexit, German hegemony and the refugee crisis- all of which can affect European economies, safety and the real estate markets. Besides, I looked around and condo projects from many major European cities fail to measure up to what's available here. Below are a few pictures. The first one is an artist's impression of two "swanky" condo towers planned for Berlin- found this in an article from June of this year. They sure look like towers that would be right at home in Mississauga by Square One. Below it is an image of Toronto's The One at Yonge and Bloor, an excellent location by the way. Let's not worry about the price so much, because the point is that I tried really hard to find some modern luxury condo building pictures for Berlin and had a horribly difficult time doing that, whereas the same search for Toronto gives you plenty of eye candy :)
- Dubai is an interesting place to consider when it comes to real estate, yet a Toronto housing market documentary called Condo Game features a real estate professional who has clients in the Middle East who buy multiple condos at the same time. Often, they buy up whatever units a new condo building hasn't sold by end of construction, and they get a "bulk price"! I'm sure that some of these investors own properties in Dubai as well, but their eagerness to buy in bulk here speaks to the value of Toronto area real estate to the world.
- Finally, let's not forget about the world's largest housing bubble- China! If you check out the ADVCHINA channel on YouTube, you are going to get excellent inside info on life, business and the housing market in China by two Westerners who have lived there for years. They don't stay in one place either; they travel to different cities and regions, recording and commenting on what they see along the way and at their destinations. There is a video featuring a ghost city full of condo buildings that are empty, with even more buildings on their way to being built. An empty condo building without solid property management and upkeep, in an insane housing bubble that dwarfs Canada's, is a doomed investment. Another video titled Why I Refuse to Buy Property in China has the main person from that channel going over the details of what happened to a condo building he lived in that was well under 10 years old. Even though the condo building is luxurious and in a major city called Shenzhen where the real estate market is ostensibly hot, he points out the lack of proper upkeep, the common elements disrepair and issues like peeling wallpaper and bad pipes that all point to an opportunity worth skipping, opting instead for a proper, high rise condo in Toronto area.
There you have it, dearest readers. Canada may not be perfect, and the rising property costs in areas like Toronto have put affordability in jeopardy for middle class Canadian families (and singles). However, what we need to understand is that this will not change. Toronto is no longer just a Canadian city. It is a global city, the city of the world. Its diversity, position in North America and global appeal will only keep growing, and so will its role as an oasis in the world of rising global uncertainties. Us locals may not see it this way- until we look from the outside in, any way we can. I did it, and this is the perspective that crystallized in my mind's eye.
What do you think?