Anyone who reads newspapers and listens to news on the radio and television these days would think that the housing market in Canada – particularly Toronto – is in rough shape.
The recent reaction by the government to tighten up on mortgage-lending rules has triggered off a flurry of negative speculation, and I am puzzled as to why. At
Baker Real Estate Incorporated, we are equal with where we were this time in 2011, which was a record-breaking year for condominium sales. As a sales group, we find the current Toronto market buoyant, and the factors that drive home sales are as strong as ever.
For example, according to the Statistics Canada Labour Force Survey for June 2012, the employment rate actually increased a percentage point over the same month last year. The number of people working in Ontario increased by 20,000 in June, full-time work was up 1.6 per cent, and the province’s unemployment rate is on par with one year ago. It would take a massive unemployment hike to bring down our economy, and it seems to me that is not likely any time soon.
And as far as the government’s mortgage rule changes, I question how much of an effect that will have on sales. We find that most of our developers demand a 20 to 25 per cent deposit anyway, as well as a contractually corresponding mortgage approval for the outstanding balance. After developers receive their construction financing, they often decide to offer special promotions requiring only a 5, 10 or 15 per cent deposit but these lower incentive deposit programs also require hi-ratio mortgage approvals. In addition, many buyers put down more than 5 per cent anyway, because they understand the long-term financial benefits of paying off a mortgage earlier. We rarely hear about these scenarios in the media.
It seems as though the negative news-bearers are not taking everything into account before handing out their doom and gloom. All the basic elements of our economic strength, success and stability are still firmly in place. We have one of the best economies in the world right now, with a stable government, reasonable unemployment, low vacancy rates and a continuing stream of immigrants.
In fact, Toronto is one of the world’s most diverse cities. More than 140 languages and dialects are spoken here, and over 30 per cent of our residents speak a language other than French or English at home. With 100,000 new residents coming to the GTA each year, we continue to build housing to meet that demand.
Remember, too, that BILD identifies the land development, home building and professional renovation industry as a major engine of economic growth in the Greater GTA, providing hundreds of thousands of jobs and billions in wages. In 2011 alone, housing activity created 193,000 jobs in new home construction, renovation and related fields, and was one of the largest employers in the region. Our industry deserves praise over criticism.
When I first started in the business in the late 1980s, we were headed into a recession. Over the past 25 years, real estate has proven time and again to be a lucrative source of investing. Rather than panic because the condo market is back to normal healthy numbers after a record-breaking year, BILD President and CEO Bryan Tuckey advises looking at this year’s statistics in historical context. He points out that the residential construction market has returned to “a regular, steady pace.” This market stabilization is a good sign of longevity.
Putting aside the cyclical nature of our industry, the media and the government would be wise to place more faith in enthusiastic home buyers and applaud their confidence in Toronto, Ontario and Canada.
Barbara Lawlor is president of Baker Real Estate Incorporated and an in-demand columnist and speaker. A member of the Baker team since 1993, she oversees the marketing and sales of condominium developments in the GTA and overseas. Keep current with The Baker Blog at blog.bakerrealestate.com
