Are we in Bubble Territory? Is the sky ready to fall on top of our overvalued homes?
I would like to see the Toronto Real Estate housing market become more “balanced” but not because I think there is a bubble or a hard landing in our future. I would like to have more product available for buyers as we have in the past, so that the average price increases are in the 4%-5% range…more in keeping with healthy affordability for all.
That said, the article below states, in my opinion, one of the best perspectives on Toronto housing values when COMPARED properly to our current status: that of a top tier GLOBAL city.
One way to identify a global city is to review its price-to-rent and price-to-income ratios. The higher these ratios are, the greater the likelihood that the area is attracting foreign dollars and disrupting the relationship between these variables. We have a very LOW currency right now and we know that attracts foreign buyers. You’ve read all the articles about them “ferners” buying up our expensive real estate right? Well when they do, their incomes are not reported. So when you “do the math”, you see average sale prices going up and incomes NOT keeping pace…in part, because all those purchases come WITHOUT the accompanying income data. The income numbers skew to the low side and the average sale prices skew to the high side. See?
And when it comes to price-to-rent? well, many landlords don’t renovate or raise rents as they wait for the next big developer to come along and offer him a big bag of cash for his land and building…rents skew low and average sale price skews high again.
And look at these comparisons for $$ per square foot for downtown apartments in Toronto vs other global cities: the $692 per-square-foot (PSF) Toronto price and $770 PSF Vancouver price look like bargains in comparison to these prices: $2,419 PSF in New York, $3,167 PSF in London and $3,297 PSF in Hong Kong.
So when you are staring down at the facts from 10,000 feet up, you may see that Toronto is a Global city, attractive to global investors who see Toronto as one of the top cities in the world to live, work and invest and that, compared to our real comps cities, Toronto represents and HOLDS its real estate value.
Click the link, read the article and let me know your thoughts. Do Not, however, go out and pay more than you can or should for your home. Contact me first and I’d be happy to help you get what you want for the price you should pay. It’s what I love to do!