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What will 2019 bring for Toronto real estate investors? - 2019Forecast

What will 2019 bring for Toronto real estate investors?


Expert Analysis

We might be cautiously late in making our predictions for the real estate market for 2019, but after spending the holidays traveling, talking with real estate investors, entrepreneurs from all over the world and getting to read all the other predictions, a few key themes emerge.

1. Investor Uncertainty Will Continue to Rise

The political situation in the US, BREXIT, trade wars, drops in major equities indexes like the Nasdaq and Dow Jones will make for an interesting year. Apple’s rare guidance cuts last week pointed to a major weakening in China and a global economy moving into recession. I was speaking to an art dealer from London who is negotiating the lease on his gallery in the super upscale Mayfair neighborhood and his landlord is prepared to accept over 30% less in British pounds. With their drop-in currency, he will be paying about half of what he was before. Similarly, for New York real estate with a recent Douglas Elliman Report has median prices for condos slipping under a million dollars for the first time in 3 years.

2. Interest Rates and Mortgage Rules will Ease

We have really tried to stay away from predicting interest rates throughout our careers as it’s not really our type of expertise. With that said, it seems there is growing consensus among industry leaders and experts that an easing of possibly both rates and rules towards the end of the year is likely if things continue on their current path.

Read More: Expecting higher rates in 2019? Don’t bet on it just yet

3. Luxury Markets Will Cool

As investors, we’ve stayed away from the high-end markets in the past simply because there wasn’t enough positive cashflow. However, 2019 may be the year to upgrade into to that multi-million-dollar house and possibly not the best one to downsize out of. Typically, purchasers in the luxury markets have a more global perspective and will be keenly aware of any concerning weaknesses.

4. Rents Will Continue to Rise

The real estate investment fundamentals for Toronto remain strong. Increased Canadian immigration targets will see more people coming to the city. Strength to our tech sector should continue as the fastest growing tech job market in North America. All this means strong rental demand and limited inventory growth.

Read More: Monthly rent across Canada expected to rise — especially in these 3 cities: report

Why do we think Toronto and surrounding markets will be good?

The bottom line is there is global uncertainty and volatility that will spook many people, but this is an ideal time for investors. As long as the fundamentals remain strong; Toronto is the fastest growing tech market in North America and increasing immigration, the real estate market will continue to appreciate.

Remember, the best opportunities come with pessimism. When everyone thinks you can’t lose, that is a sign that you are at the top and most likely to lose. Investors that identify the right opportunities will see 2019 as a year full of potential. You just need a stronger stomach than you have in the past.

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