Is the Real Estate Market Going to Crash?

I’ve heard lots of speculation that the real estate market is due for a correction but it has yet to happen, why?

Housing bears are convinced: Canada’s inflated real estate market especially in and around Toronto and Vancouver is overdue for a massive correction.

They have plenty of evidence to back up their hypothesis:

  • Cap rates are low in most major Canadian markets, which implies landlords are content to make up a lack of rental income via capital gains.
  • Valuation metrics like price-to-household income and price-to-rent ratios are at record highs.
  • And the Bank of Canada continues to raise interest rates.

But there’s plenty of evidence real estate can keep growing or at least stay on this plateau for a while.

  • Immigration is still strong and most of these new Canadians are choosing to settle in our largest cities.
  • The world is filled with expensive real estate; Toronto and Vancouver are hardly unique there.
  • And the economy is still going strong and may continue to do so, especially if Toronto becomes a technology haven

There’s evidence for both a crash and continued strength, so what’s going to happen?

Personally, I think we’re in a new reality where real estate remains expensive in our largest cities. Any significant downturn will be met by a rush of investors looking to get back in before prices appreciate again, offering support on the downside.

I think that if you can afford the payments then now is a good time to buy, don’t wait for a crash that may never come!

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