Now Creative Group May 16, 2017 No Comments

In this blog post, Tembo Financial will outline some of the main underlying foundations of the real estate market in the Greater Toronto Area. These foundations are the key pillars of strength, resilience, and health in our housing market.

Low rates: The Bank of Canada has interest rates set at 0.50% and there is no intention from the Bank to raise rates anytime soon. Inflation in Canada is at record lows and has been decreasing so there is little pressure on the Bank to raise rates.

Stable economy: Unemployment in Ontario is at 5.8%, the lowest level in over 16 years. Jobs are plentiful, consumer spending is strong, and there are several sectors which are growing quickly, particularly technology, advanced services, and finance. Governments are spending large amounts of money to support the economy and construction and development is widespread. Real estate in Ontario has always remained strong with unemployment at present levels.

Immigration: A strong economy and society are inviting for immigrants, especially when one considers the present situation in Europe, the United States, and the Middle East. Record numbers of immigrants are entering Canada, and many of those migrants who have already lived in the country for some time are now buying housing and moving out of rentals. Net immigration will hit 350,000 a year for the foreseeable future. These new Canadians will need housing in the short, medium, and long term.

The Greenbelt: The Greenbelt is a massive tract of protected greenspace on the edges of the Greater Toronto Area that is blocked from housing development to preserve farmland and protect the environment. This has restricted supply, driven up the costs of land and thus of housing, and will stimulate other sectors of the real estate industry, particularly high rise condos and rentals.

Better regulations: The number of high risk, high debt mortgages in Canada is much lower than was the case in the United States a decade ago. While the cost of money is low, buyers need good jobs, solid credit, and fairly large deposits to secure mortgages and ultimately close a house purchase. Canada has been internationally recognised as having a strong regulatory system in place with regards to housing and mortgage issuance.

Stellar banks: Canada’s big five banks are widely regarded as some of the best run, most successful, and most profitable in the world. Our banking system operates under much more stringent regulatory system than many of our counterparts. Our banks are healthy and growing and were not bailed out by governments as was the case in the UK and the US. Canadian insurance companies are also financially solid and growing.

In combination, these five pillars have contributed to the most dynamic sellers’ market in the history of southern Ontario. Tembo Financial has great confidence in the long term health of the GTA housing market.

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