Why GTA Real Estate Market is Recession ProofJuly 16, 2022
Real Estate is always a topic of discussion and more important discussion is How Market is behaving? When the market will go up and when the prices will tumble? Most of the report and analysis are about the Canadian Market. In general, people make their analysis on the basis of the report for Canada and giving their judgment about Market behavior. That’s not a fair way to evaluate any particular market. For sure, The national data and market make an impact on all the individual markets, as the national data is a compilation of all those markets together. There are so many other factors which influence a particular Area, City, Region and so on.
When We talk about the GTA market, there are many other different factors which control the Real Estate Market in GTA. When we talk about Ontario as a whole, Real Estate is the major business activity among the province and a major factor to drive the economy. There are many different areas in Ontario which have their own market attributes. But overall GTA has always been a strong Real Estate Market.
Why do we call GTA as a recession-proof market? If we review the data provided by the Toronto Real Estate Board, which is a true indicator of the GTA market, we will get our answer. From 1969, GTA market is steadily growing in terms of No. Of Sales and prices both. The growth is on a regular pace with few exceptions. Last 15 Years ( 1999-2014), the pace of growth has been remarkable and the prices are almost doubled in this time frame. There are many factors which makes GTA as 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 the majority of immigrants coming from South Asian Countries & China. Those are growing economies and especially the last 10 years these economies have shown a splendid growth. New Immigrants are attracted to a better lifestyle in Canada. They are investing heavily in 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 Market like Brampton, Mississauga, 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 on a strong pace. Last 10 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 which is 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 of the major banks have special facilities like New Bank accounts, credit cards and other credit options available for new immigrants. All this helped new immigrants to establish fast in the Canadian economy and Real Estate was always a good option to invest. The immigrants also responded well to these special offers and contributed well in 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 historic low rates of interest in the last few years. During the world famous recession of 2008-2009, GTA was one of the few markets in the world who refused to show the signs of recession. If we review the prices of Real Estate in 2008 -09, there was no price decrease. Though no. of sales was a bit down, the prices were showing positive growth. It was a clear indicator that the GTA market is recession proof. Once the economy showed the signs of recovery, the prices started shooting up on a good pace and are going up steadily from that time. A big thanks to the Ministry of Finance to take a timely action to bring the rate of interest at a low rate. 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 on a check. Though it makes an impact on the whole Canadian market but helps more to the less volatile GTA Real Estate Market. GTA market always has shown a steady pace of growth and 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 at that time 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 at a fast pace for a longer period of time, there is always a chance of correction and negative growth.
To conclude the GTA Real estate market was is & will remain a recession-proof market and will always keep attracting the investors and buyers. There have been predictions from various sources of the slowing down of the market but GTA Real estate market always proven those predictions wrong.
Avoid The Complex Offer to Purchase Contract
Whether you’re buying or selling, the offer to purchase contract is meant to protect 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 conditions of the sale and your mortgage approval falls through. In this case, 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 type of contract and the conditions of them day in and day out. They can advise you on how to use 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 the main reason you’re deciding not to hire a broker is 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 that would be paid to brokers.
If you’re the seller and you’ve decided to attempt to handle it on your own, it’s likely you’ll price your home based on an area comparison analysis of sales prices of other neighborhood properties. Keep in mind that the properties were most like sold with the help of a real estate broker, resulting in a better deal.
In order for a buyer to reap the benefits of a private sale, the seller would have to be in agreement to split any potential savings of not having to pay broker commissions. At the end of the day, the buying and selling processes aren’t as simple as most would assume. Difficulties can arise, and it’s always a better idea to have a professional, licensed real estate broker on your side.