Greater Toronto Housing Bubbles

Real Estate Bubble?

Some says we are currently experiencing a real estate bubble in Canada. We believe that it is not entirely true! If there is a bubble, it is thick enough to be burst in next couple of years.

It is too soon for home owners to panic and sell their property to avoid price adjustment in an unforeseen future. Actually, the market trend does not show a buyer market, we are still in seller’s market in Greater Toronto areas.
Reasonings:

1- Bubble will burst when interest rate goes up significantly or financial institutions apply more restrictions on lending mortgage. When these institutions are lending money with ~%3 interest rate for 5 years, it simply shows that the experts do not predict a huge fluctuation in interest rate in next few years.

2- Market watchers usually and wrongfully compare the real estate fast growth in Canada with US. However, we should consider that there are significant differences in economical models between these two countries. The financial model in US is more susceptible than Canada and it is not strictly regulated. Canadian economy depends on resources whereas in US it is more divers and mainly based on production and investment. It is less likely the case that the same fluctuation is waiting to hit Canadian real estate during a great recession.

3- Canada is already experiencing a minor recession though the federal government (Conservatives) cut the interest rate to boost economy. Housing is one of the main foundations of Canadian economy. We believe that if Conservative government ( in comparison with Liberals, NDP and Green parties) are more cautious toward the momentary decisions and financial investments and plan to keep the overnight rate constant during the next 2 years then other parties are more moderate. Some experts anticipated an increase in interest rate before it is cut by Bank of Canada.

4- If the price of oil risesand Canada safely passes the recession then upon the increase in interest rate the buying power will also be increasing which will balance the market.

Summary: Too soon to be afraid, the safest pace is to invest on investment properties before the bubble gets bigger (There has been %11 increase in price ). Take advantage of low interest rate, the bottom line is to make money out of renting. Visit Toronto MLS lisitings at: www.ehomz.ca to browse homes for sale and rent in greater Toronto.

Categories: Greater Toronto Area Real Estate Updates, Popular Cities: Toronto Homes for Sale