The Toronto Market Going Into March

I have been surrounded by doomsayers for the past three years predicting the collapse of the Toronto real estate market using words like 'bubble', 'over-priced', 'irresponsible' and worst of all saying there is no logic to current home prices. Sooner or later there will be some sort of correction in our market and they will all spring from the woodwork shouting how they were right!

The Toronto market DOES NOT defy logic. There are rational reasons for what is currrently happening with home prices:

1. There is a scarcity of listings, supply is low.
2. Changes to mortgage rules coming this month have spooked many buyers into rushing to buy a home, demand is high.

These are the immediate causes for current sale prices reaching record highs but the Toronto market has been fueled by other, longer and more stable trends:

1. We are the principal destination for immigrants and foreign real estate investment in the Canadian market.
2. Commute times in the GTA are becoming intolerable to many residents prompting them to seek homes closer to the core of the city.
3. Our home prices, regardless of what we may think of them, are below or in line with most primary and secondary world markets (so go ahead and argue whether we are a primary or secondary market)
4. The increase in home values for a number of years in Toronto has been orderly and measured.

People who have been waiting for the 'bubble to burst' are watching as their purchasing power slowly gets eaten away and are rushing to buy 'before it's too late'.

So, what should you do now:

If you are thinking of selling, get your home on the market as soon as possible, demand is huge right now.

If you are trying to buy, be patient and don't get pushed into a rash decision, overpaying by a huge amount for homes currently on the market. Watch what happens in the next month as the '35 year amortization' effect passes and more homes come on the market.

If you absolutely need to buy now, be prepared to get out every day to see new homes, bring your cheque book and be prepared for a fight. You probably won't win your first bidding war so don't let yourself get too high or too low either.

April will be a good month! Relax! :-)