Exploring the Future of the Canadian Condo Market
In November, after the American election, night, American citizens broke the Canadian immigration website. With so much talk of moving to Canada, what does this mean for the Canadian condo market?
Truth is, there's a lot of buzz going on in the market right now. Read on to find out whether or not it's worth it to take the risk in the current market.
Canadian condo market: crazy?
When it comes to the Canadian condo market, one thing is for sure: the seller is king.
It's a seller's market out there, which causes rents to skyrocket. Like other big cities, it's leaving potential buyers out in the cold.
This even translates into bully offers - when a buyer submits an offer well above the asking price well before the intended offer date.
Bully offers tend to be a double-edged sword. From the seller's point of view, you could be offered far more than you'd expect to be on the offer night. From the buyer's point of view, you're trying to get the house for well below what you think it would sell for.
Still, Canada's condo market is quite normal when compared to other cities in North America.
The average home price in Toronto is roughly $916,000 (April 2017) when calculated in Canadian dollars. Compared to Boston at $540,000, London at $746,000, and Hong Kong at $921,000, things look rather peachy.
Inflation is coming
The aftermath of the US election means that Donald Trump may actually boost the Canadian real estate market. With several United States citizens looking for a new home in Canada, the market is going to be busier.
However, Trump's plans are destined to cause inflation. He plans to increase the public debt, and while he promises to fix several things, this means one thing: inflation.
Does this impact real estate? Yes. Yes it does.
Most financial managers refer to real estate as "inflation sensitive." Going off of that, there's no denying that Canada's current housing market strongly resembles that of the US prior to the burst of the housing bubble.
In fact, they're slightly less affordable than America's houses were right before the crash. Currently, Canada's house prices are about 16 times the average income. In the US, they were 12.5 times higher than the average income before the crash.
Canada's household debt is also higher than America's was, resting at 96 percent, while America's sat at 94 percent.
Regardless of whether or not history's set to repeat itself, one thing is certain: Canadian real estate is hotter than ever. Increased demand means the money is going to keep flowing, and there's no sign of it letting up - especially in cities like Toronto.