THE TORONTO MARKET IS CRASHING – GET OUT NOW

Come on… didn’t you read Facebook’s recent post about how to spot fake news? Fear mongering and clickbaits about the Toronto real estate market have been running rampant in the blogosphere and you just fell for another. We’re officially EXHAUSTED by them and ready to set the record straight. When someone says the real estate market is crashing and tells you to get out now, here are ten things you MUST remember:

  1. Rich people own property. It’s not a secret that if you are wealthy you own property. Take a moment and survey the wealthy, affluent people you know. Do they own or rent?
  2. Toronto is NOT Vancouver. If you went for a late-night stroll in Vancouver, you’d notice a lot of the lights are off. In Vancouver the vacancy rate is quite high but in Toronto it’s less than 1%. Unlike the foreign investors in Van City, here in the TDot we aren’t just ‘parking’ our money, we rent to pay the mortgage.
  3. The ‘facts’ haven’t changed in 10 years. Ask yourself what’s different in the market now that gives the writer the basis to make these assumptions? These opinions and ‘facts’ have been publicized since before I even purchased my first property — and guess what? — increasing prices were a thing then too. These arguments and headlines haven’t changed nor has the commentary and motivations of those vying for your attention, selling papers and getting paid for your clicks.
  4. High cost of living, low salaries. This is the biggest argument that I hear time and time again — the underlying fundamentals don’t correlate with our salaries. But really, do you think the correlations make sense in New York, San Fran, LA or Paris? No, of course not but the markets in these cities have proven historically to be steady. There are very few 25 year old recent grads in New York purchasing real estate. It’s just that in Toronto we’ve been conditioned to think that we are entitled to a piece of that 6ix soil… but things are about to change my friend. Real estate is the rich man’s sport — the rich get rich, and those who aren’t, well, they get priced out.
  5. Safe guards won’t help. Adding additional hoops to jump through only inadvertently hurts those at the bottom of the market making it harder for them to get in. While the rich…well they can pay for someone to jump through the hoops for them.
  6. Toronto is growing rapidly. The Toronto Region’s population base is one of the fastest growing in Canada. Toronto has more than twice the proportion of recent immigrants (8.4%) as Canada (3.5%) with approximately two million more expected by 2023 [1]. Adding to the trend is Canada’s low dollar and high quality of living (16th in the world) making Toronto an ideal home for migrating foreigners [2].
  7. You can’t build in Toronto anymore. We’ve run out of land in Toronto and building materials have become even more expensive. The government has also been adding taxes to real estate developments which are being passed down to the consumer. Purchasing multi-unit condos will be your best bet in Toronto; there are fewer on the market and with the recent increase in developments focusing on smaller one bedroom units, you’ll get a bigger bang for your buck long term.
  8. Real estate is a consistently good investment. These might be fighting words for some, but I believe whole-heartedly that it is one of the lowest risk, highest earning investments you can make with your hard-earned dollars. Recall what you’ve made in stocks, bonds and RRSPs over the last 5 years or even 10, can they begin to compare?
  9. Precedence is king. Or, perhaps queen. The government will do everything in their power to prevent a heavy correction or crash — it’s in their best interest. History has also shown that when real estate tanks, so does the economy. It’s in everyone’s best interests not to enact measures that could cause depression-like spirals.
  10. A market crash is possible, but. Precedence has shown that yes, it’s possible, so is a stock market crash. However, history has also shown that the first thing to recover when the economy crashes is the real estate market. Historically, stock and bond prices have trailed well behind the real estate market’s recovery and until the real estate market corrects the economy will continue to lag behind.

Don’t get me wrong, I’m not saying the real estate market is going to go up at a record pace year after year… it won’t. What I am saying is everything is cyclical, if the fear mongers keep preaching a crash they will eventually be right, the inevitable is in fact unavoidable. The real question however is when and for how long?

If you’re worried about market irritability, opt for a long-term strategy, ensure you don’t over leverage or have a particular ‘sell by’ date. History and precedence has shown that real estate is a safe, long-term investment and your flexibility will eventually lead to optimal profitability.

If you’re waiting to jump into the market realize this, the earlier you get in the further ahead you will be and the greater chance you’ll have of owning property during those record breaking periods.

When you’re ready we’ll be here with a full service team ready to help you start building your wealth through real estate.

Pierre Carapetian on Global TV - Toronto Housing Market

Pierre shares his skepticism on the measures to cool the Toronto housing market on Global TV.

2017-11-02T16:16:09+00:00

Leave A Comment