The world over, anybody who is looking out to purchase a home or any real estate property should know that the prices of homes keep on increasing day by day. That is why the Toronto case is not any different from anybody who is looking to purchase a home in Toronto will tell you that the price will increase on a regular basis. This has been occasioned by some factors among them the recent rise in demand.
Besides the forces of demand and supply, let us look at some of the other factors that experts say lead to the rise of real estate property prices in Toronto.
Factors that are fueling the rise of house prices
1. Interest rates
Due to the recent circumstances of the Canadian central bank keeping its lending rates nearly at the lowest levels. Most of the Canadians are now borrowing loans and mortgages like never before. A spot check conducted recently revealed that there has been a tremendous increase in household debt as compared to there relative income as compared to another well to do economies. Due to this low-interest rates, many people are now not worried about taking up big loans to purchase houses hence driving the demand high and hence the rise in the general asking or selling price.
2. Foreign buyers
Research and references from the central housing and mortgage department have shown that at least 10% of housing units in downtown Toronto are owned by foreigners. Whenever foreigners invade any market be sure that any commodity that is being sold in that particular market will shoot at the price. In the case of Toronto, the prices of homes keep on rising because foreign investors more especially from China have flocked the real estate market and they want to purchase homes in Toronto. About a third of the purchases that are being made in the Toronto housing market is being transacted by foreigners mostly of Asian origin.
3. Tight/low supply
This is another factor that has contributed to the rise of home prices in Toronto. As per the record that is in the real estate board, in the recent few months, active listings of housing units reduced by 21% as compare to the same period the previous year. In other documents, the plunge was estimated to be at as high as 41%.
4. Shacky economy
When the economy is shaky, and it shrinks jobs will be limited, and people will be forced to sell their homes, but this has never happened with Toronto as the economy is mostly stable and people are economically stable always hence the constant high demand for homes by a stable middle class leading to constant shortage hence constant and rising prices.
5. Realtor boom
When the price of a home is high, the sales agents usually get high commissions. Research has shown that recently there has been a tremendous increase of realtors in the housing market in Toronto. Since these people handle the housing sales in Toronto, they will go to every length to ensure that the prices of this houses remain high so that they can always get high sales commissions.