Monday, 28 November 2011
Never would I have thought any one would compare Toronto to Miami, but alas it is now happened. in fact, I've read a few articles in the past week or two comparing these two seemingly incomparable cities.
Is it the tropical temperatures? The miles and miles of beaches? The art deco? Hmmm... not exactly.
The reason: new condos. Toronto will have some thing like 16 000 new condo units hit the market next year. Some like to compare this to Miami, who reached similar numbers in it's heyday.
Of course, Miami is not in its heyday any more. Far from it. And some like to think Toronto will go the same way of the dodo bird (re: Miami).
It is true that Toronto does have a lot of new condos in the works and does have a certain amount of foreign investment in condo units now like Miami had 5 or 6 years ago, but there are some huge differences that cannot be ignored. Most notably: Toronto's market is not linked to a subprime mortgage crisis in the United States. And secondly, our four full seasons keeps Toronto out of the same league as Miami as far as vacation destinations go. Miami's crashing market probably had a lot to do with the temporary vacationers and not people who actually live/rent in the city. I have a feeling there are some secondary vacation homes in the Toronto market, but nothing compared to Miami. And lastly, Toronto has a much more diversified economy than Miami. Miami has oranges and beaches. Toronto has entertainment, health technology, and it's the financial centre of Canada. So, if people stop visiting, the city isn't going to have it's housing market plummet.
I'm not saying that Toronto's market will never see a price correction ever again. I'm just saying that Toronto is not Miami. So let's stop comparing Ontario apples to Florida oranges.
Thursday, 3 November 2011
Is it here yet, the housing crash? Lately, this question has been asked of me more and more. With the ups and downs of the stock market, a new plot twist every week with the European debt crisis, plus the endless uncertainty of another reccession, you can't blame someone for asking.
And to be honest, I don't know. Housing markets ebb and flow, and they can certainly head down. But, no housing market stays down for the count. It always rebounds eventually, So, it's important to look at the long term, and see what's pushing Toronto to higher property values, and a good place to invest for the long term. First, we have immigration. Twenty thousand new immigrants to this city every year. Second we have the momentum of urbanization. Culturally speaking more people want to live in the city closer to where they work, and closer to every thing a city has to offer - fancy food options, entertainment, and boutique shopping.
And then there's the Green Belt policy to protect the lands from development around the city, and to encourage smarter, more densely populated vertical growth in taller buildings. This has led to some pretty unusual results as far as the city of Toronto is concerned. First, condo development and construction has exploded. Toronto has more condos being built than any other city in North America and possibly the world this year. That could sound pretty frightening, but on the other side, single family new houses being built in Toronto has fallen considerable. So, with these policies currently in place, it's not such a bad time to by a house. After all, there are only so many houses in Toronto, and not a whole lot more being built. All the development is happening in the condo market because developers want to maximize the use of limited land in the city, particularly close to the subways.
So, this may not be a crystal ball as to the state of the real estate market in 2012, but I think for the long term, buying in the city, especially a house, will likely be a very smart investment decision.