So about a year back, I was at a really cool party at a really swank downtown Toronto loft, and as usual, being my non-wallflower-type, I was talking to people. Socializing, mingling…it shouldn’t be hard to picture me in this environment, I know. One conversation that night stands out in particular though. Me and this 30-something guy (let’s call him Mike) were chit-chatting about life, and when we get to what I do for a living, and I said ‘Im a real estate agent, his eyes lit up, and he got started…
Mike tells me that he would NEVER buy a condo here because he knows better. You see, he’s very well-read he tells me, and he keeps up to date with the news. He knows that there’s a Toronto condo bubble coming. He knows that prices are going to plummet. He knows that everyone is going to lose all of their investments, and so on, and so on.
So I just politely listen to him going on and on and on about how he knows all about it, being very well-read and all. Meanwhile in my head I’m thinking, “Where is that waiter with the wine?” and “Should I or should I not tell him a little bit about what I, a knowledgable downtown real estate agent knows on this subject?”
Right now, Toronto has a tonne of condos, and more are being built all the time. Houses are being sold with incredible gains in epicly short periods of time. And because of that, a lot of people believe (including Mike) that there is a Toronto condo bubble. The thing is, I don’t agree. At all.
Of course, you’re saying right now: “You’re a Realtor, Karyn. Of course you’re going to say that there isn’t a Toronto condo bubble.”
Humour me for a sec though, could you? I certainly can’t predict the future, but for all of the stories out there talking about an imminent Toronto condo bubble, an unstable economy, and an over-valued housing market, there’s just as many facts backing up that NONE of this is really the case.
Let’s start with what I heard out of the mouths of experts on the “Toronto Life: The Future Of Toronto Real Estate” panel recently. “There is no bubble in sight” echoed all of Toronto’s biggest real estate mavens present that night. To see a really significant drop in real estate prices they said, we’d need to have a really significant recession. The recipe for something like that is a specific combination of: high economic growth, high inflation, high interest rates, with a dash of low unemployment. Simmer it all on low heat, and you have a runaway train that must be derailed by the federal government. But this is just simply not the case here in Canada right now, or anytime into the foreseeable future.
While the media says one thing, the data right now tells us that the so-called Toronto condo bubble is not imminently going to burst. It is more likely that the damage done in late 2000 is the extent of what people like Mike think will happen “one day”. That train was derailed in 2008, and now it will need to build up speed before it can run away to clear the path for the next recession.
Experts say it will likely be pretty far into the future, maybe as far as two decades from now, before that ever happens. With the slow recovery, coupled with very low interest rates, and a high government debt, it’ll be a very long time to rebuild the economy to the run away train conditions that happened then.
Toronto is being “Manhattanized” because of all of these people that want to live downtown instead of in the suburbs (who can blame them?). The fact is, more people than ever before are moving to Toronto and need and want to live in the city. The more people, the more demand on housing. The more demand, the higher prices get. And higher prices mean that if they can’t afford to buy, they need to rent; simple as that. All those new condos attract investors who buy them and rent them to people who maybe can’t afford to buy themselves.
You know me. I’ve held jobs in news radio, news television, reality television and documentary television, and trust me when I tell you this: a story about stable markets is simply not good news, and not anything people will want to read, so not anything people will read so something has to get talked about. Everyone lives in a house or a condo, so everyone cares about it.
The act of buying and selling real estate in Toronto is an investment. It’s not a guarantee (no investment is) but my parting words to you are that here in Toronto: “it’s a damn good one.”
So, that brings me back to Mike, the well-read, well-informed man who knows so much about the real estate market. Where is he? I don’t know for sure, but if I had to guess, I’d say he’s still living in his 1 bedroom rented apartment, with life passing him by, as he waits to avoid the so-called Toronto condo bubble.