Many of my clients asked me why the average real estate property price in Toronto is still climbing despite the economic slowdown and the rising unemployment rate in the country. Well … that is because the Canadian real estate market is getting lots of love from foreign buyers. These days, getting a real estate license in Ontario or British Columbia would be a smart career move. A successful real estate agent in those market has huge income potential.
Foreign investment in Toronto’s residential and commercial properties hit its highest level since 2007. 90% of those deals are closed in the 2nd half of 2015, when the Canadian dollar was in a free-fall. The falling loonie has made the Canadian real estate market even more attractive to foreign buyers. Investors are pouring in from all over the world to take advantage of the exchange rates. Most of them are coming from China, looking for long-term residential properties or investment properties in major Canadian markets such as Vancouver and Toronto.
Besides the exchange rate, foreign buyers are also attracted to the fact that the Canadian real estate market has been relatively stable compared to other international real estate markets. Other cities are also benefiting from the ripple effect from Vancouver and Toronto, raising the average prices in B.C. and in Ontario real estate market.
Even within Canada, the oil-based Albertan economy has been hit pretty hard lately from numerous layoffs and business shutdowns. Due to the shrinking numbers of opportunities in the province, many works have moved out of the province to look for jobs in more stable job markets, such as Ontario and B.C.
Current Market Environment – Q1 2016
The Toronto Real Estate Board’s latest data shows in the first three months of 2016, transaction volume rose 16% compared with the same period last year, while the average closing price is up 14%. The increase in deal volume occurs at a time when the number of new listing is on the decline. With more buyers from abroad and less listing supply, this is putting more upward pressure on real estate prices in Canada.
As an agent, I sold a 1 bedroom + den condo downtown for $595,000 last week (July 2016). The same unit was originally listed last spring but sat for 60 days with no buyers. This time, bookings and offers came in from the first week of listing. Earlier in March, I closed a 1 bedroom with no den, near University and Adelaide, the price was north of $900,000. The demand I’ve seen this year is just unprecedented.
Is Sky the Limit?
Today, the housing prices in Toronto is averaging at $685,000, how much higher can it go?
In Toronto, the average price for a detached house is approaching $1 million. For most of the international buyers, the housing prices actually became more affordable over the last 12 months due to falling loonie, but for the local residents, a detached home is becoming more of a dream.
A more realistic option for a young couple would be buying a condominium. Many high-end condominiums had an impressive run; however, there are still a few listings in good neighborhoods with a reasonable price tag.
Most of my foreign clients are home buyers, looking for a home to settle in a good Canadian neighborhood. I also have foreign clients that are “generation investors”, which means they are looking to buy a home for their children to live in when they migrate to Canada. This is an encouraging and a healthy sign for the market because it shows that rising prices are not directly fuelled by speculators or property flippers.
Although the majority of them are from Asia, lately, I have signed up more clients from the States.
The Trump factor
Canada has a positive international image of being a prosperous, friendly and tolerant country. I know we are a highly taxed country, but in return, we do receive a highly subsidized health, education systems, and good public services.
According to Google, the search term for “How to Move to Canada” spiked up in the States during all the Republicans debates.
Will the Trump factor really materialize into another rally in the Canadian real estate market? Well … stay tuned to find out.
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