On February 8th, the Canadian Real Estate Association published a revised Annual Resale Housing Forecast. With strong economic growth higher than forecast and expected, the housing market has been going strong. Is this a suprise? Actually, no. All the positive news coming out of Canada has made it very enticing for foreign investors.
We are having a new construction boom you can say in Toronto. If you look at our sky line, more than 15 different projects are underway. Cranes can be seen everywhere. Niche properties like the new Four Seasons, Ritz Carlton, Trump Tower, Shangri La, Aura, and One Bloor East are underway. Even more in the plans, and sales centers going up. Who is buying this? Everyone, from new homebuyers to foreign investors, to local investors and in between. Why? Because of low vacancy rates, high appreciation, and forecast population growth. Toss in a stable banking sector and money comes pouring in.
So why Toronto? Not exactly just Toronto, but the Greater Toronto Area or even the Golden Horseshoe. Very simple, expected population growth as forecast by Statistics Canada. A reported 12 million people will move to Southern Ontario, that is double the population by 2025. People will need to live somewhere, and smart growth and business friendly municipal governments attract residents and investors. The GTA is already one of the 10 biggest metropolitan areas in North America!!! It is up there with New York City, Chicago, Miami and Los Angeles. Some parts of Ontario, like Kitchener/ Waterloo are experiencing continued growth thru sound city planning. This will only continue. The more these regions grow, the more investment money will come.
As stated by George Pahud, CREA President “Home buyers recognize that low mortgage interest rates represent a once in a lifetime opportunity. At the same time, they expect that rates will rise, so they’re doing their homework in order to understand what it could mean in terms of higher mortgage payments down the road before they make an offer. The housing market and buyer psychology is different now than it was at the beginning of last year, so buyers and sellers would do well to consult their REALTOR® to understand local market trends.” This would explain the year over year average home price increase of 4.5-5%.
However the new forecast states that home prices wont rise as fast over the next few years. As the report states ” The national average home price is forecast to rise 1.3 per cent in 2011 and 2012, to $343,300 and $347,900 respectively. Average price is expected to rise modestly in most provinces, reflecting the continuation of a healthy balance between supply of, and demand for, homes listed for sale.” Expect some markets to have faster growth.
For the full report: Annual Resale Housing Forecast
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