The value of the U.S. Dollar over the Canadian "loonie" has seen investors migrate northward and buy prime Canadian real estate these past few years.
But if you've been tuned into the goings on in Toronto real estate over the past little while, you'll probably notice that the reason for the explosive growth in Toronto real estate values stems more from an influx of migration to the city, coupled with low interest rates, versus foreign investment.
Sure, Donald Trump's a big believer in Toronto real estate.
So much so that he's building a Trump Plaza right down town.
And yes, the Saudi's with their oil money are investing in Toronto real estate downtown, but that's not what I mean to point out.
There is a great and simple lesson we're seeing here be put at play with Toronto real estate.
For one, the past two years the Canadian economy has been very healthy. Thanks to its mineral-rich environment and growth in far away markets like China, Canadian mineral exports are way up.
Secondly, interest rates still remain at an all time low in nearly 5 decades. Toronto real estate buyers are loving this fact.
Lastly, the influx of migration to one of the nation's top cities to work, live, and play in, has driven demand for Toronto real estate nearly through the roof.
In fact, at the time of this writing, Toronto real estate buyers are actually BIDDING ON PROPERTY.
That's right, you list a property for sale, and it's sold within 32 days - fetching HIGHER than it's market value.
Toronto real estate buyers bidding today are using emotion, not logic, to drive their spending decisions.
Remember, economies and real estate markets are cyclical.
So to those Toronto real estate buyers who are overpaying for property, in the next 3 years just wait - prices will cool, and the market will settle.
The psychology of Toronto real estate buyers here is much like that of real estate buyers in any other appreciating market who are paying above retail.
They speculate, and they'll get burnt.
By the way, let's not lose sight of the fact that between 1990 and 1994, Los Angeles real estate values depreciated by 41%.
Sure, LA recovered - but would you want to be a homeowner during that period who actually needed to sell?
Moral of the story - Unless you're buying a property in a market like this that is WELL UNDER VALUE, step out of the game, and hold your breathe. It will pass...then wait.
Because there will be Toronto real estate buyers who in the coming months ahead will get into a situation, need to sell their property quickly, and will give it to you for what they owe.
So, help those people out. You'll be doing them a favour.
And that means you'll be buying Toronto real estate at a steep discount when that deal comes your way. You can bank on it.
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