Why Real Estate In Toronto Is Still The Best Investment
Owning real estate, whether a home or investment property is still the largest single investment for the overwhelming percentage of people in Canada.
Recently, the CMHC stated that the COVID-19 pandemic and resulting shelter at home practices could send average home prices in Canada down by up to a stagerring18%. Although this could be potentially horrible news for real estate speculators, for most of us however, who are long-term homeowners,’ real estate in Toronto is still the best and safest investment.
Average home prices in Toronto have increased by well over 5% annually over 25-year periods going back to the 1930’s and this includes the period of the 2008 global financial meltdown when predictions for a severe housing market collapse in Canada never came to fruition.
For people looking to get into home ownership either as an upgrade from a condo or for their first real estate purchase the next 3 years could open a window of affordability to residential real estate in Toronto that has not been likely in over 10 years. One of the biggest risks in the market prior to COVID-19 was the potential for higher mortgage rates, which now are not likely.
Real estate in Toronto is also unique from other investments in terms of risk. A short-term decrease in the price of real estate is not the same as a decrease in the price of a stock. Real estate is transacted far less frequently, which allows a lot of time to go by for that price to fully recover or even increase. Real estate ownership also allows average investors to use leverage, the equity involved by borrowing at very low interest rates and using said real estate as collateral. Over time, that same equity as it builds up over time can also be used to again borrow through credit instruments like home equity lines of credit.
Home ownership also now as encountered a newfound role as sanctuary of safety and solitude. The value of a home in a time when shelter in place could become more and more popular is immeasurable. Yes, business as usual has been turned on its head but there will always be an economic comeback. Overall investment trends may go in and out of fashion but there will always be demand for places for people to live, and most of us want to own that investment and will pursue all avenues possible to make that happen. The same simply can’t be said for owning stock in Amazon or Google.