Building Wealth through Real Estate in GTA

Home price growth is forecasted to continue in 2017.

Toronto Real Estate Board President Larry Cerqua announced that Greater Toronto Area REALTORS® reported 12,077 residential sales through TREB’s MLS® System in March 2017.  This result represented a 17.7 percent increase compared to the 10,260 sales reported in March 2016.  For the TREB market area as a whole, annual sales growth was strongest for condominium apartments and detached houses.

The number of new listings also increased on a year-over-year basis, at 17,051 – a 15.2 percent increase compared to March 2016.  The strongest growth in new listings was experienced in the detached market segment.  While new listings were up strongly compared to last year, the rate new listings growth was still lower than the rate of sales growth. As a result, GTA market conditions continued to tighten.

Prices for all housing types — from condos to detached homes — were up across the GTA, bringing the average sales price to $688,011, according to figures released by the Toronto Real Estate Board. The strong year-over-year price growth points to the unrelenting high demand for ownership housing in the GTA, coupled with a shortage of supply of homes for sale in the marketplace.

Strong competition between buyers continued to cause high levels of price growth in all major market segments.  The MLS® Home Price Index (HPI) Composite Benchmark Price was up by 28.6 percent year-over-year.  For the TREB market area as a whole, the average selling price was up by 33.2 per cent, with similar annual rates of growth in the low-rise and condominium apartment segments.

Presently housing prices are more correlated with low-interest rates and increased debt levels and not with increased compensation or income. According to CIBC employment quality index, compensation has fallen to its lowest level on record.

Making payments for properties at well above their market value cannot be ruled out, in the present day market environment. If that happens, it may take several years for buyers to recoup premium costs, if there is a trend reversal. Bidding wars have become a feature of most parts of GTA real estate market. Even in a rising market, you can truly make a mistake with lasting consequences, if there is no proper research. To ensure profitable results, now investors and home-buyers are required to perform extensive research within a very short period of time.

Putting their emotions aside to make an informed buying decision may be difficult for many people. The truth is that real estate market does fluctuate. Therefore, it is also important to decide on the maximum amount you are willing to pay. Are we not predicting the future, often by looking at the rear-view mirror? Just because house prices are going up now and have been going up for some time doesn’t mean they will keep going up forever.

Finally here’s my recommendation.

Despite the pros and cons, your investment portfolio should necessarily have housing assets or its equivalents. It is like a blue chip stock. In the medium to long term, it will perform well. But you have to select a property in an area that has the right fundamentals, whether you buy it for your living or leasing. Real estate investing for the purpose of leasing is one of the best options for building wealth if you can withstand short-term market fluctuations and cash flow issues. Mastering cash flow with real estate WILL make you a millionaire, in the end, say in a decade or two with as little as a couple of hundreds or less in the beginning as an investment.

If you are wondering how to, let us get connected. I may be able to show you the path.

Perrii is a full-time Realtor in GTA, engaged in matching sellers with potential buyers. To contact for free consultation, his phone number 416 473 6100 and email: perrii@perrii.com

Actionable Idea

  1. Include housing assets or its equivalents in your investment portfolio, since it is like a blue chip stock.
  2. If you do not know how to, contact Perrii

 

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