What’s ahead for the Canadian real estate market this year? In general, the Canadian Real Estate Association predicts a strong year ahead, with balance coming to markets outside Toronto. Scotiabank chief economist Warren Jestin suggests that the Canadian market is likely to “simmer” – it won’t reach any new heights, but it will stay steady, and there won’t be any sign of a crash. Both of these forecasts rely in upward trends in the general economy at large. In Ontario, Hamilton is leading the rise in prices, with prices increasing there faster than anywhere else.
And what about that oft-predicted “correction”? Royal LePage claims that there have already been several “mini-corrections” across Canadian markets, and we’re unlikely to see anything more significant until the price of money rises, which is unlikely to happen anytime soon. Meanwhile, the solid 2014 that CREA predicts is driven in part by the supply/demand imbalance in major urban markets like Toronto’s and Vancouver’s. “Housing price gains are always stronger in places where supply is tight relative to demand, such as we’re seeing in Calgary and in parts of southern Ontario including the low rise market in Toronto,” said Gregory Klump, the chief economist at CREA.
One of the drivers of Toronto real estate market is foreign investment; investors from abroad are buying a fair bit of Canada’s luxury real estate. This is part of a global trend in luxury real estate, with buyers from China, Iran, and elsewhere buying up homes in London, New York, and Toronto. In London in particular, home prices have soared in the past few years since the 2008 crash as foreign investors have bought up much of the Square Mile.
While Canadian buyers are used to Canadian interest rates and are situated to this particular context and all the expectations that come with it, foreign buyers have seen higher prices and shakier economies and are more experienced in weathering real estate storms. If they are immigrating, they may also have access to capital and savings as part of the application process. These funds can help make putting together a down payment much easier.
Stay tuned for Part 2, in which we’ll discuss Toronto-specific market trends for 2014!