Real Estate Market Predictions

As we come to the close of 2015, I’m reflecting on the varied recent reports on the real estate market predictions I’ve been reading. There have been wild extremes in opinions that have certainly made the general reader very confused and trepidatious regarding the condo market – reports that span across the bull/bear real estate market spectrum. Just as there are announcements of market doom-and-gloom, as there have been for well over a decade (that haven’t materialized), there are also overly optimistic views, such as this recent video recorded on BNN stating a 30-40% increase in condo values over the next few years:

(There are some long advertisements prior to the actual clip starting – it’s worth it to suffer through the ads to get to the interview.)

Neither the crash or boom extremes do I think should be taken seriously.

What I believe in are the real estate fundamentals: good access to transit, well located for shops/retail/groceries/dining/cafes, properly managed and constructed buildings, and a good floor plan with functional space. With these elements in place, you are far better off to have a desirable condo that will hold its value now and well into the future.

People will always need a place to live in Toronto, so by purchasing a condo that best addresses these fundamentals, you’ve secured yourself against a correction. Not ever condo will be protected should a correction arise (and nobody realistically knows when or by how much things may alter), but if anyone will be affected it will be the impractically located condos with poor/cheap designs. There are many of those in Toronto, and the aim is to simply avoid these. Overall, I am personally witnessing a healthy condo market right now with a balanced number of buyers and sellers and continued interest in purchasing real estate from local as well as foreign end-users and investors.

If your alternative is to rent, then you are guaranteed to lose that monthly amount out of pocket to your landlord. If you purchase, you are at least building equity each month. And if the condo is your principal residence, there is no capital gains tax to pay on any appreciation, unlike earnings from paper assets. In doing some quick math for your own scenario, you may find that renting versus owning results in roughly the same monthly carrying cost anyway.

Lastly, I wouldn’t be doing something I didn’t believe in. There is a reason I invest in real estate myself and work as a real estate broker, and that is because over time, with wise and informed decisions, I’ve seen individuals do very well in real estate.