Toronto Condo and Real Estate Blog

So, you want to invest in Toronto real estate and get rich fast? Investing in real estate in Toronto has always been popular. Toronto’s property market is well established, mature, quite highly priced and has a very different dynamic as you move from neighbourhood to neighbourhood.

Experts say the secret to successful real estate investing in Toronto is research, research, research. Review your moves, get good advice, and look for clues in various reports and sources. The pay-off is two-fold: ongoing cash flow and capital appreciation.

Here are a few top tips you need to consider when searching for investment property in Toronto.

1) Don’t be tempted to over stretch yourself, financially speaking. Think carefully about whether any potential perceived benefits from investing in property in general do outweigh the risks associated with buying an expensive, slow to liquidate investment asset. And only if you are sure they do should you begin to research the Toronto real estate market for a profitable entry point.

2) Determine whether you are looking to work your investment quickly and turn it into a capital gain by buying low and selling high or whether you’re interested in realizing a regular income from the rental of a property for the long term. Your investment approach should guide your buying decisions depending on your decision. Simply, identify what is it you really want from the property. Do you want to make a quick $30,000 in a very short period of time or would you be happy with earning $800 to $1,000 a month for the rest of your life?

3) Ignore national statistics. Focus on the numbers and trends that directly affect your market. Check if population growth, average income and job creation are faster than the provincial average.

4) Is the area’s affordability index in the hot zone? You don’t want the property to be too expensive or too cheap because if its too cheap, renters will become buyers and if its too expensive, the property values may stall.

5) Enlist the help of a realtor who has experience selling real estate in Toronto, more specifically one who specializes in the type of property you are considering. Also, enlist the help of an independent lawyer to assist you with your purchase transaction.

6) Start small. For a first-time investor, try a Toronto condo. These are not only affordable, but there’s always a good supply and demand for them and they can give you an affordable income. This holds true in all the bigger cities such as Toronto, Vancouver, Montreal and Calgary, where immigrant populations are high. Remember, new immigrants prefer to rent for their first few years in the country and they tend to choose locations close to transportation systems, malls and grocery stores.

7) Use the golden rule when it comes to the average prices of property in a chosen area. If a property  is cheap, this could mean that tenants can actually afford to buy this home. But, if the prices are rising quickly in the area then be aware that you might not get buyers right away and the home might take some time to be sold.

8) Is the location forward looking? Is it up and coming or is it dying? Is money being invested into things such as transport links, communication, and general infrastructure or is the population dwindling? Look carefully at the location and see if you think it has long term and sustainable appeal.

9) Finally, bear in mind that the area is attractive to Baby Boomers. They are usually looking for well priced locations with excellent amenities and with lifestyle and recreational facilities. They are usually ready to spend large sums for a great and attractive home.

10) If you are thinking about a house over a condo, then think suburban. Larger lots and lower real estate prices are drawing more people to the suburbs communities that are growing fast across the country.

If you use a common sense approach to researching your real estate investment options in Toronto, you will be far more successful in your hunt for a profitable piece of property. Don’t forget to research, research, research to let the money flow in. Good luck!

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Contact the Jeffrey Team for more information - 416-388-1960

How Would the U.S Market Crunch Affect Canadian Real Estate in 2008?

The market crisis along the south border has many homebuyers wondering how it will affect the real estate market in Canada, but Canadian market analysts feel the problems the U.S. is experiencing should have little impact on real estate in this country.

Canada is not expected to experience the same downturn as the U.S. market for many reasons. First, the Canadian economy is simpler and the investment environment is more conservative than the United States. Secondly, Canadian federal surpluses have given consumers more confidence which has led to increased spendings on homes, retail goods, and business expansion. Additionally, the Canadian real estate market has not been artificially driven by bad lending practices. And, unlike the U.S., all mortgages in Canada are insured.

However, Canada’s booming real estate market could loose heat by the end of the year. The impact of the U.S. sub-prime crisis is expected to be felt by Canadians in three different ways.

First, a tightening of credit markets will occur as lenders move to correct their losses because of the investments in commercial papers. To borrowers, this may also mean smaller discounts off the posted mortgage rate.

Secondly, due to the overall economic impact and the soaring Canadian dollar, the impact will also be felt. There may be a slowdown in some business sectors related to real estate and that may impact Canadian consumer confidence.

Thirdly, the impact on our economy could come form the falling purchasing power of the U.S. consumers, which in turn impacts large ticket purchases that involves Canadian made products - the auto sector is a good example.

“The Canadian real estate market will slow down a bit in 2008, but that slowdown will be nothing compared to what happened in some U.S. markets in 2007. In Canada, the real estate market has been setting records for volume and units sold for five consecutive years. We believe things are just moving back towards a more ‘normal’ growth pace, but that still means the 2008 MLS home sales activity will be the second highest on record, second only to the overall record was set in 2007″, says the Canadian Real Estate Associations’s Chief Economist.

The Canadian Real Estate Associations’s market analysis for 2008 also does not show any dramatic adjustment in the average MLS residential price, again contrary to the conditions in some U.S. markets. The Canadian Real Estate Associations’s analysis shows prices setting new records in every province in 2007 and in 2008, but price increases will be smaller in 2008.

In effect, price increases will become smaller as the real estate market becomes more balanced. Manitoba and Nova Scotia are expected to post an increase in average price of 7% or more in 2008, while New Brunswick and Newfoundland are expected to show the smallest increase in average price of 4% annually. The national average residential MLS price is expected to increase 5.5%.

“The real estate market is expected to grow at a more moderate pace this year. However, this will be the result of decreasing affordability rather than the impact of U.S. sub-prime woes”, said Craig Alexander, deputy chief economist at Toronto-Dominion Bank.

To conclude, real estate markets will remain tightest in the western provinces in 2008. Even though Alberta and British Colombia are expected to pull back from the blistering pace they set earlier in 2007, housing there will remain in high demand. The days of 25% or 30% increases in average price are over, but prices are forecasted to go up in Alberta and British Colombia by 5.2% and 5.1%, respectively. Ontario’s market and other eastern provinces are expected to keep its momentum with a slight slow down.

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Contact the Jeffrey Team for more information - 416-388-1960

The Bank of Canada announced last month that it is reducing its key interest rate by a quarter point.

As a result of sharp declines in Canada’s stock market and the increasing fears over the state of the US economy motivated the Bank of Canada to cut its key interest rate on Tuesday for the second consecutive month.

The bank reduced its overnight lending rate from 4.25% to 4% in the hopes of minimizing the effects of a potential US recession. In December, the Bank of Canada cut its benchmark rate by a quarter point, marking the first reduction in more than three years.

The Bank of Canada indicated that additional rate cuts were likely to come soon.

“Further monetary stimulus is likely to be required in the near term to keep aggregate supply and demand in balance and to return inflation to target over the medium term,” the bank said in a statement.

Following the Bank of Canada announcement, chartered banks quickly decreased their prime lending rates by a quarter of a percentage point to 6%, effective Wednesday.

This interest rate cut means cheaper borrowing costs for Canadians with variable rate mortgages, lines of credit, and other loans with floating rates. However, fixed-rate mortgages are not likely to be affected directly as their rates are influenced primarily by movements in the bond market and not the Bank of Canada’s overnight rate.

Rates on fixed mortgages have been fairly steady recently. Even so, mortgage shoppers can’t go wrong with a mortgage pre-approval with a rate hold. If rates drop, you’ll benefit from the new, lower rate. If rates on fixed mortgages rise during the rate hold period, you will still have your original lower rate.

In an ever-shifting interest rate environment having an optimal mortgage strategy is crucial, a  mortgage broker can advise you on how to get the most from your mortgage financing.

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Contact the Jeffrey Team for more information - 416-388-1960