Why GTA Real Estate Market is Recession Proof
July 16, 2022Real Estate is always a topic of discussion, and a more important debate is How the Market is behaving? When will the market go up, and when will the prices tumble? Most of the reports and analyses are about the Canadian Market. In general, people conduct their research based on the information for Canada and give their judgment about Market behaviour. That’s not a fair way to evaluate any particular market. The national data and Market impact all the individual needs, as the federal data compiles all those markets. So many other factors influence one specific Area, City, Region, etc.
When We talk about the GTA market, many other factors control the Real Estate Market in GTA. When we talk about Ontario, Real Estate is the major business activity in the province and a major factor in driving the economy. There are many different areas in Ontario which have their market attributes. But overall, GTA has always been a strong Real Estate Market.
Why do we call GTA a recession-proof market? We will get our answer if we review the data provided by the Toronto Real Estate Board, which is a true indicator of the GTA market. Since 1969, the GTA market has steadily grown in terms of No. Of Sales and prices both. The growth is at a regular pace with few exceptions. Last 15 Years ( 1999-2014), the rate of change has been remarkable, and the prices are almost doubled in this time frame. There are many factors which make GTA a recession-proof market.
The biggest factor is the demographics of the area. GTA area has a good influx of new immigrants every year, and most immigrants come from South Asian Countries & China. Those are growing economies, especially in the last ten years; these economies have shown splendid growth. New Immigrants are attracted to a better lifestyle in Canada. They are investing heavily in the Real Estate market not only all over GTA but all over Ontario. But GTA gets the most share of investment. If we look at individual Real Estate markets like Brampton, Mississauga, and Toronto, we will see steady growth in sales and prices. It’s not only the investors but the genuine first-time buyers who hold this Market at a strong pace. Last ten years, Immigration has changed a lot, and many professionals are coming to settle down in the GTA area. Their first objective is to get Rid of rent, a major expense. They have to spend 25-30% of their income on rent. Thanks to many special New Immigrant programs from Banks & CMHC. The new immigrants are getting special mortgage approvals with limited credit and minimal down payment. Most major banks have special facilities like New Bank accounts, credit cards and other credit options for new immigrants. All this helped new immigrants establish themselves fast in the Canadian economy, and Real Estate was always a good investment option. The immigrants also responded well to these special offers and contributed to the economy, especially Real Estate Market. The good influx of immigrants always maintained a genuine demand in the Real Estate market.
The other major factor was the historically low-interest rates in the last few years. During the world-famous recession of 2008-2009, GTA was one of the few markets in the world that refused to show signs of recession. If we review the prices of Real Estate in 2008 -09, there was no price decrease. Though no. of sales was down, the prices showed positive growth. It was a clear indicator that the GTA market was recession-proof. Once the economy showed signs of recovery, the prices started shooting up quickly and have been going up steadily since that time—a big thanks to the Ministry of Finance for taking timely action to keep the interest rate low. The Market also responded well to attractive rates and didn’t allow the recession to show signs of a slowdown in GTA.
A very strong Canadian banking system and strong lending guidelines also helped to keep the economy in check. However, it impacts the Canadian Market; it allows more to the less volatile GTA Real Estate Market. GTA market always has shown a steady pace of growth and is well adapted to the volatility of the Market. There has always been a good pool of genuine buyers which maintained a good demand in the Market. There were intermittent periods when the inventory levels were low, and the Market responded well with multiple offers and more aggressive price growth. The best attribute of the GTA market is it will always ease a bit after a short period of fast growth. If the Market keeps going up rapidly for a longer period, there is always a chance of correction and negative development.
To conclude, the GTA Real estate market is & will remain recession-proof and always keep attracting investors and buyers. There have been predictions from various sources of the slowing down of the Market, but the GTA Real estate market has always proven those predictions wrong.
Avoid The Complex Offer to Purchase Contract
Whether you’re buying or selling, the offer-to-purchase contract protects you should the deal go south. For instance, you can back out if your conditions aren’t met, such as failure to include financing in the needs of the sale, and your mortgage approval falls through. If you paid a deposit, you could lose it entirely. Legally, the seller can also sue you for breach of contract.
Real estate brokers are extremely experienced in dealing with these types of contracts and the conditions of their day in and day out. They can advise you on using the contract to protect your interests and inform you and the seller’s agent which conditions should be included and which can be safely omitted.
Money Savings Aren’t Guaranteed If You Go It Alone
If you’re deciding not to hire a broker mainly to save money, you may want to consider your decision more carefully. In most cases, both parties involved in the transaction won’t see benefits from eliminating the commissions paid to brokers.
If you’re the seller and you’ve decided to attempt to handle it on your own, you’ll likely price your home based on an area comparison analysis of sales prices of other neighbourhood properties. Remember that the properties were most like sold with the help of a real estate broker, resulting in a better deal.
For a buyer to reap the benefits of a private sale, the seller would have to agree to split any potential savings of not having to pay broker commissions. The buying and selling processes aren’t as simple as most would assume. Difficulties can arise, and having a professional, licensed real estate broker on your side is always a better idea.