14 Feb ARE WE AT RISK OF A REAL ESTATE BUBBLE??
Being a Real Estate Investor, I get asked this often. You regularly see some headline about ‘Real Estate Bubble’. So it begs the question…are we?
Anytime I speak with other financial, real estate, economic, planner or investment experts, I always ask their opinion on this.
95% of the time, the answer is no…we are not at risk of a real estate bubble in the GTA. (There are always pessimists…who are often selling products on how to avoid the upcoming doomsday scenario)
Are prices rising quickly? You bet they are! Is that going to last forever? Nope. It never does. Will the red hot real estate market slow down and possibly even see a couple of below average appreciation years? Eventually.
That’s exactly why Robert Kiyosaki wrote in his book Rich Dad Poor Dad “You make your money in real estate when you buy, not when you sell…”
But will we see a dramatic drop in prices or a ‘correction’ in the market because of inflated prices (a bubble)? Well…no one knows for sure and unforeseen things could happen (someone could fly a plane into the CN Tower…) but the majority of experts that study the numbers for the GTA housing market say that we continue to have a healthy economy, a real estate market where demand still outweighs supply and lots and lots of people arriving every year looking for a home!
So we conclude we are most likely not in a bubble…
I just saw an article from the Canadian census that stated Toronto has grown at a rate of 6.2% whereas Canada as a whole has grown at 5.8%. So Toronto is growing faster than the national average. A good sign for the real estate market (especially when you consider that’s 6.2% of the largest population in Canada)!
Further from the article, it states that a third of all Canadians live in Toronto, Vancouver and Montreal…12.5 million people. And almost half of that figure live in the GTA. That’s A LOT of people who want to live the dream of owning a house.
It says immigrants and young people are more attracted to the urban centres so while rural populations are getting older, residents in the major cities are younger and/or moving here to start families. More property buyers arriving every day…
All reasons why Toronto’s housing market continues to boom and is most likely not in an inflated price state (like the Chicken Little’s who write the headlines would have you believe).
Nothing in life is for sure (except death and taxes) and when evaluating an area, there is definite data that can tell you the health of a real estate market and what could happen in the future.
Plus, every area in the GTA is different. Talking about Toronto as a whole is like saying Canadians are polite or Leaf fans are gluttons for punishment (wait…maybe those last 2 actually are true??!!)
You have to do your research on each area to really understand what is going on before buying or investing in any real estate.
If you want to know more about how I evaluate real estate investment opportunities (of all kinds) or get an educated opinion on something you are currently looking at, you can contact me here for a consultation.