Why is the Market So Crazy?
Monday Jul 26th, 2021
We say the market is crazy when homes are selling for way over asking price and there are multiple bidders or buyers on homes otherwise referred to as a bidding war. The housing prices have skyrocketed. In order not to date this video, listing the average home sale price does not make sense because it is changing monthly. Check out my monthly market update for an idea of current prices. You can also email me to receive in-depth monthly market reports at email@example.com.
Why is the demand so great? Why are there not enough homes? When is the market going to slow down?
Even with the COVID-19 Crisis of 2020/2021, we didn’t’ see a drop in housing prices. Unless there is a worldwide crisis, natural disaster, or severe changes to borrowing policies, I cannot foresee the housing prices coming down over the next few years for the following reasons.
Firstly, Toronto and the surrounding area is one of the best cities in the world to live in and word is getting out quickly. The stability of our government and welcoming Canadian culture makes increases the desirability of living in such a great country which means that people from around the world are coming to Canada in droves.
The new immigrants to Canada are also coming with lots of money to invest.
The desire to own a home in Canada is so great that people are clamoring to purchase one. It is quite easy for immigrants to obtain financing for homes, sometime qualification requirements are less stringent for new immigrants than for Canadians that have resided here for three years or longer.
Secondly, we are running out of urban land to build homes. There is a greenbelt surrounding the Greater Toronto Area that cannot be built on. We are seeing fewer and fewer lots available to build detached homes. Condominium Apartment Buildings are being built on what once were parking lots. Because there is little land left to build homes, there is bound to be a shortage of homes. We are seeing this demand not only in Toronto but also in surrounding areas such as Durham, Peel, Halton and York regions. Other areas of Southern Ontario such as Wentworth and Niagara Regions are seeing more demand as well. Up until a couple of years ago, Durham region used to be an affordable alternative for first-time homebuyers. I repeatedly put them there because home values were lower, the commute to Toronto is not so bad because of the Go-Train, the communities had a neighbourly feel compared to the City of Toronto and the schools are pretty good. Pickering, Ajax and Whitby were hidden gems with few bidding wars. Now there are multiple offers on every home listed. Fewer people are moving and the home inventory is much lower.
Thirdly, interest rates continue to be very low. These are the lowest rates ever seen in history. It is predicted that rates will continue to remain low for the foreseeable future. This means greater purchasing power for buyers.
Fewer people are moving. If you are fortunate to have a semi-detached or detached home or have parents that have detached homes, they are not moving until absolutely necessary. I’m not leaving until I go in a box, is the expression I hear often. The baby boomer generation are holding on to their homes and accruing equity and selling only when health or financial reasons necessitate a lifestyle change.
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