There are quite a few people that still expect the real estate market to crash and burn. Since I have experienced as a professional a market where this happened I can testify that it’s not a good thing. It’s a terrible situation for people to lose their homes and I do not wish it for anyone. It also usually means that the economy and society as a whole receive a major blow.
Back to here and now there are 5 strong reasons why this is unlikely to happen in the Toronto & GTA market.
- Mortgage service. Recently it was shared that 99.86% of Canadians with mortgages pay their mortgages on time. This is the highest percentage ever recorded. This fact shows that no distressed residences are expected to come up for sale. If there are any they will be the rare exception and not the rule.
- Inventory. The numbers show that overall we have an extremely low number of residences for sale. In recent months they are at their lowest percentage for years. Why? Homeowners that bought homes 2 to 3 years ago and have fixed rates are not motivated to sell. Homeowners that have bought many years ago with lower mortgages are also less motivated to sell. Unless they are experiencing a major life change. The lack of inventory is also one of the reasons the price decline slowed down towards the end of 2022 and has now almost flattened.
- Demand. We are in the first 20 days of 2023 and a few hundred residencies are already sold. The market is not at a standstill and people determined to buy are still out there. A recent survey at the end of 2022 showed that a significant percentage of people plan to move in 2023. This means to buy or sell during this year. It is also expected that the high rents we see will motivate renters to enter the market and buy a home.
- Employment. Recent unemployment numbers are at 6% for Toronto. Businesses are growing in various sectors. Full-time employment is high and that means there is money circulating in the economy.
- Immigration. The number of people coming is staggering. We expect 465,000 in 2023, 485,000 in 2024, and 500,000 in 2025. The statistics show that 60% to 65% of them move to Ontario. The vast majority want to be in the GTA. Exactly because of the employment opportunities. These hundred of thousand of people need somewhere to live.
In my opinion, the gradual price adjustment that took place in 2022 is the best thing that could happen. It may be a challenging time for the expectations of sellers but it all depends on why they want to sell. Despite popular belief, homes and condos are selling for a fair market value. As long as they are promoted and negotiated in the right way.
Yet, it is an opportunity for buyers that previously could not enter the market to find the home they wanted. At a fair but more affordable price.
Buying real estate is a long-term investment that continues to add to the wealth and well-being of families. There are years of statistics to this point and it is not going to change in the long run.