Some pundits say the Greater Toronto Realty market could fall 10-20% – & some say 28% (from$822,681 or $918,138) … but, that prediction coming true is in Nobody’s Best Interest (N.B.I.) except….

4f-CPI-10_5_5_5EXCEPT it IS in Everybody’s Best Interest (E.B.I.) who is 1) a well-paid tenant w/good credit, but no savings [who has been priced-out currently]; or 2) a media-savvy, sound-bite provider from a competing Investment business [Stock/Bond ETF etc]; or 3) someone who really thinks prices are too high and have drawn that/those opinions/conclusions from well-researched, data analysis regarding mass-behaviour, manias/panics/bubbles, me-too-but-too-late speculation in realty and other investment marketplaces

….. You can believe Future Price predictions quoted by well-spoken people interviewed in the media who present the Self-Interests of Group 1) or Group 2) or 3) and …. they might be 25-50% right …. or they might be 70-100% wrong.

The future is always the tricky-est to talk about because of unknowable factors  …. AND THEN most-often, when you ARE right about the future, it’s for the wrong reason and nobody (really) likes to be right-for-the-wrong-reason (but they/we WILL take credit for predicting market direction/strength correctly – no matter the reason)- some notable quotes 

The key to the future (the aspects that are denominated in C$ anyway) is wrapped together with 2 Inevitable Fiscal/Monetary/Financial Components: Time and Inflation.

Time may be Money, but I think Money is Time (i.e. you get paid for your time/knowledge/ability)

Inflation is a factor in the appreciation/devaluation of Money which is how we measure “Value” in Real Property (and a lot of other items that are traded or kept or enjoyed)

A previous post noted the Inflation component of GTA prices in last 15 yrs – when the average inflation rate per year was just 1.73% (which compounds to a +29.38% increase in number of 2017 Dollars to equal a 2002 Dollar).

 

TREB Year End Average for 2017 was $822,681

comprised of $271,403 “Inflation”

+ $551,278 in 2002 money

What if … our Sovereignty’s Economy Manager(s), the ConFederal Steward(s) of the Canadian Commonwealth, the Trustee(s) of the Treasury and Assets of the Governed AND the Governors decided to unleash “just a touch more” inflation (we all already know that Gas and food and ‘anything good’ has gone up more than the +/-2% that is announce as the CPI increase and future target).

IF … they adopted that approach (which actually means devaluing the currency by the amount of the inflation) in an effort to make their fixed-dollar and fixed-rate & term Bonds easier to service using “depreciated dollars” (we sold Homes this way in the 1970s/80’s when inflation was 8-9% and employees all had Cost Of Living Allowances [COLA] built into their pay contracts – it worked, because it was true).

If inflation is the next phase, then interest rates will have to follow.

There will be a run-up in prices as people chase prices, chase interest rates AND as inflation underminds the currency – prices have to rise to reflect constant value (unless you think living in a prime spot, in the best city, in the best country will all-of-a-sudden grow out-of-fashion for the best, brightest and best-paid people.

So buy something “in the path of change” a property that may not be anyone’s idea of perfect right now, but that can soon-be sub-divided or re-zoned (a corner lot; or home on main street; a wide frontage; home abutting commercial; etc) and I’d say it’s better to buy something that cannot be divided/rezoned right now …. but predictably i.e. after the next round of analogous Intensification Approvals are pronounced.

I prefer this to putting down 20% on a 587 SF (2 bedroom they say) condo priced at $950.00/SqFt with a initially-promised completion date of 2021 because:

a) it’s not built yet and the ‘community and culture’ that IS a condo corp has not been established;

b) it might not be worth $1000/sf NOW, nevermind in 3-4 years;

c) you’ll be declaring your Buyer Status when you pay Land Transfer Tax and disclosing the ultimate sale on your Income Tax form, so be sure the builder make you pay HST on the Purchase (yes, there’s a soon-come rebate), plus CRA will watch for your HST on the Commercial gain, Cap Gains(or Income) Tax on the appreciation realised AND …. you’ll have to rent it for minimum one year to qualify for some of those tax-reductions/reliefs

Or …. if that’s too much trouble you could buy an ETF like the guy says on TV – or speculate on bitcoin (the new Bre-X) or (Feb 1, 2018) the Blockchain ETF (that emulates the issuer’s own index of related stocks …. sheesh)

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