GTA Housing Market Outlook Still Looks Bright

The GTA resale housing market has slowed down in recent months, leaving many homeowners fearful about the future of real estate in our city. In response, the Toronto Real Estate Board recently invited senior executives from eight of Canada's largest real estate companies to take part in a panel discussion and to share their points of view on what to expect in the near future.  

The panelists all concurred in their opinions that the future of the GTA housing market is "bright and promising."

Media coverage of the global financial crisis, they say, has caused a decline in consumer confidence, which is the cause of the current dip in real estate. Pointing to healthy indicators like strong employment, stable immigration and low interest rates, the panelists are confident that economic fundamentals in Canada that support a healthy housing market will remain in place.
            The panelists pointed to the fact that we have seen much more challenging times with more problematic economic fundamentals than what we are currently experiencing. Many of today's homeowners can recall the days of the early '80's when interest rates peaked at more than 20 per cent and inflation jumped to nearly 13 per cent, as well as the early '90's when massive lay-offs and 12 per cent interest rates were the news of the day. In contrast, today's interest and mortgage rates remain at historically low levels of around 5.5 per cent, inflation sits at 3.5 per cent and more than 9 out of 10 Canadians are working.

            The panelists also compared Canadian homeowners to those in the United States in order to illustrate our healthy situation. According to Canada Mortgage and Housing Corporation, only 0.27 per cent of Ontario mortgages are more than 90 days in arrears, compared to 6 per cent during the recession of 1992. In the United States meanwhile, 4 per cent of prime mortgages and 18 per cent of sub-prime mortgages are in default.

            There is also much for Canadian homeowners to look forward to with respect to real estate values in the next decade as the children of our country's 11 million baby boomers begin house hunting. According to one recent study, the number of young adults currently living with parents in the GTA is 10 per cent higher than the national average. This group's future demand for housing is coupled with the fact that Canada is ranked number one in terms of population growth from immigration, amongst the G7 nations, with more than a quarter of a million new immigrants each year.

            A recent study by the International Monetary Fund substantiates what Canada's top real estate experts already know. It studied housing markets in 17 countries and found that Canada was one of only two nations in which house prices are supported by the economy. According to CMHC, from 1999 to 2004 Canadian residential real estate offered an average annual growth of 6.8 per cent compared to only 5.8 per cent for equities and 5.3 per cent for bonds. All of these positive statistics point to a fairly quick return to good market conditions. As anyone who has bought a home knows, there is no better long term investment. 

If you are looking to buy or sell your home please contact Joseph Bitton at 416-801-8600 or email bitton@torontorealestate4u.com.