In case you’re not aware of this Canadian real estate trend, the Toronto real estate market is crazy! Or is it? Numerous write-ups have been published about how out of this world the market in Toronto is at present time…but, is it really that vastly different from any other sought-after areas? Find out below!
What you have to understand is that any market has several factors affecting it. Toronto has more than several but today, we’ll be focusing on the 3 main factors that are driving the real estate boom.
The Toronto real estate market is being driven by these major factors:
The Greenbelt Act of 2005 ensured that the land across GTA up to Lake Scugog and Rice Lake won’t be developed as residential nor commercial space. Back then, the Liberal government froze the development of about 1.4 million acres of land from the Niagara River all the way to the Golden Horseshoe area. This created the ‘GTA Island’ effect. The nearest developed areas outside of the GTA is a few hours of commute away, prompting people to choose between buying in the GTA if they afford it, or commute a few hours a day to and from work.
Because only a limited area of land can be bought for building homes, Toronto real estate has a steady demand from people wanting to live within the GTA. The constant deficit is because the supply cannot keep up with the demand all because of restricted land supply.
It isn’t a secret that Toronto’s population is rapidly increasing. Existing residents are building families, and the opportunities plus great quality of life are driving people to want to move in Toronto.
In 1986, there were only 3.7 million people in Toronto. This increased to 5.5 million in 2005 and is at around 6.3 million these days. The population is projected to reach 7.3 million in 2021 and climb as high as 9.1 million in 2036! That’s 3 million new residents in just 20 years from now!
There is no denying that Toronto’s population is booming. With more people comes the demand for more homes. The available land for development isn’t going to suddenly increase anytime soon and as a result, existing available land soared in prices, especially those that would make good condo development sites.
Record Low Interest Rates
Toronto is currently at its record low interest rates. At present time, a $500,000 mortgage goes for $2,117 a month with today’s interest rates and a $1 million mortgage goes for $4,234 a month. Compare that to having a mortgage with a 10% interest rate and you’ll be paying $4,272 a month for a $500,000 mortgage. Such a huge difference! Good thing that the last time Toronto had a 10% interest rate was 20 years ago, eh?
So, is the Toronto real estate market truly out of this world crazy? That’s for you to decide.
Different people have different definitions of what crazy is. If you’re trying to purchase a modestly-priced home in Toronto, then you might say the cut-throat competition is on the crazy side. If you’re someone looking for great real estate deals, then you might think it is crazy not to try to get yourself a piece of the action, especially with the low interest rates and possible high reselling profits if current trends are to continue