Does anyone here know the Canadian market well?

Question

I regret not having invested in Toronto in the last couple of years, price went double in just a couple of years, but now I'm not sure if the market could cool down or will it keep climbing up. Would love to hear some opinions.

Roy N. · Answer

@Daniel Massicotte

« Massicotte » un nom que je connais de la région de Lac Saint-Jean (et La Tuque).

@Tia Terrena

There is no "Canadian Market" as real estate is a local phenomenon.  As such, the real estate markets in Vancouver and Toronto are not representative of the entire country.  Much of what is occurring in these to markets in recent years is speculating {grabbing onto the tail of a fast moving train}, not investing.  There are still investors in TO, but there are lots of folks who are gambling as well.

Both these markets have been steadily, if not crazily, climbing for almost a generation - there's a good chance neither of you can remember the last correction of real estate prices in the Toronto area.   While neither I, nor those with far deeper economic credentials, can tell you when the train will stop, or whether it will fly off the tracks at tight bend, the further real estate prices diverge from underlaying economic fundamentals the greater the possibility the ride comes to an abrupt stop - even if it later picks up the pieces and gets back on the track.

When the music does stop, there will be a lot of folks looking for a place to sit down.

Daniel Massicotte · Answer

I have a few Toronto friends who shower me with URLs every few daysshowcasing the impending doom of real estate in Toronto and how the bigger the rise, the bigger fall.... and then I look at BC, on the other side of Canada where immigration levels are minute compared to here, and notice that the real estate market has recovered considerably in the last year... almost completely. If there is a drop in Toronto it won't apply everywhere and it won't be for long.

My strategy is buy and hold, typically 4-7 years, on mostly pre-construction projects in premium locations.

Eric Delcol · Answer

@Tia Terrena

Even Warren Buffet regrets that he didn't start investing earlier (he started at 11).  Don't kick yourself too hard for the past but motivate yourself to pull the trigger.

Toronto, like San Francisco, Manhattan, or Miami will be a growing city for many, many, years and all those folks will need somewhere to live.

Lalit R. · Answer

Hi Tia,

Single family in Toronto is still a good investment. The Ontario green belt policy is not going to change anytime soon and if you buy a property that needs repairs, you might have fewer bidders. Having said that, I wouldnt do it since my investing principle of positive cash flow is not met. Same thing with Condos in prime Toronto. They are bound to have very attractive Cap Appreciation but I wouldnt do it for the very same cashflow reasons.

Hope this helps. Let us know what you decide.

Tia Terrena · Answer

sounds good. Just sent you a msg.

Claude Boiron · Answer

Hi @Tia Terrena, I did several interviews today about the provincial government's "measures" for the Real Estate market, and my thoughts are that very few are going to have any real impact. The 15% will affect, in my opinion, way fewer than 1% of buyers in the Greater Toronto Area. Residential landlords were targeted today, since all properties, irrespective of when they were built, will have a form of rental control applied - this will still have little effect, since rental vacancy rates are so low that landlords will jack rental rates between tenancies. Happy to discuss on the phone if you have specific questions. 416 nine nice three eight one nine nine.

Tia Terrena · Answer

Thanks Claude, I've been thinking about getting a house downtown. I just don't know if now its a bad time or I should still go in before it really gets bad. I know for a fact in 2013 houses (not condos) are already not cheap, my friend purchased a semi-detached around Ossington and College for $700k, granted it was newly renovated. I've been looking around Christie Park because I know that area. Until this year some tiny detached house was sold over $1M there, I can't tell you how much I just lost it right there. A few people I know holding multiple houses there are not even selling anymore, 2 years ago they were asking for $500k for some run-down semi detached but I didn't take the bite, not I can't get in the game anymore. My thought is condos are not really worth buy and hold for the long run in Toronto. I also don't know how much that new 15% tax is going to affect Toronto because a lot of foreign buyers are still exempt from it. What are your thoughts?

Claude Boiron · Answer

Yes, I know it very well. Ask any questions you'd like, @Tia Terrena.

Daniel Massicotte · Answer

@Roy N. - Yeah, I'm originally from Trois-Rivieres. Lived in Montreal as well. Somehow I made it to Toronto after floating Asia for a few years. :-)

@Tia Terrena - Re: Local Phenomenon, yes that's very true. "Condos" in Seoul go for $3-5M+ Especially the financial and business districts of Yeoido and Gangman. Any most of those units are just as tiny as the Toronto Condos.

Tia Terrena · Answer

Yea i kind of dont think price in Toronto will drop either, just because it is still cheaper than a lot of big cities in other countries where immigrants come from. A lot of people dont know international markets so they think Toronto is a local phenomenon, but i just recently realized that real estate price in China and Brazil for example went from dirt cheap to higher than Toronto in the last 10 years, im starting to think anyone with a relative in Canada will now want to buy property in Canada,aka Toronto Vancouver

Does anyone here know the Canadian market well?

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