The past week we’ve seen turmoil in the markets, and uncertainty worldwide, as Britain voted to “Brexit” the European Union.
In the days leading up to the vote both sides shared their points of view on what would happen given the opposing result.
Now We Know
Stock markets dropped around the globe and gold jumped in price. Currency markets everywhere fluctuated like a flag in a high wind.
There is still a large amount of uncertainty how we will all fare during the next couple of years while Britain makes it’s exit from the EU.
I believe there are a few things that will now happen with almost certainty.
- Interest rates will remain at their current low levels for a couple of more years
- Stocks will rebound and appreciate at their steady pace before the “Brexit” vote
Closer to Home
In Canada, home prices will stabilize across the country and employment will continue to improve.
In the Toronto area current low mortgage rates, for at least the next couple of years, will continue to keep demand for housing on the high side and the city’s population growing as public transportation, highways and employment continue to improve.
Builders will continue to bring to market homes that fill the demand of purchasers and investors.
The pre-construction releases of this year will see improved ROI as the communities in which they are located continue to see a build-up of additional residences, along with advances in public transportation and lifestyle amenities that improve the desirability and demand to live there.
Even when I look beyond the next 2 to 3 years, Toronto’s housing market will remain strong, and the bust to the current boom (if any of the naysayer’s predictions come true) should ensure that home prices do not recede past 2016 levels.
The Canadian federal government is looking how to rein in the hot Toronto and Vancouver housing markets, and early recommendations seem to indicate an easing of prices rather than an outright drop which would effect more than just home values. We may see a foreign ownership tax of sorts or additional taxes on house-flippers. Homes for investments that are rented out should remain untouched.
Toronto may also open up much of the region’s greenbelt to allow new developments of the highest demand types of housing: detached single family homes.
Overall, Brexit will force central banks to maintain the status quo on interest rates. Low interest rates will keep the Toronto housing market strong. Builders will continue to develop homes that people want to live in and build up the local areas driving demand and returns on investment.
I will continue to keep my eyes on the most promising Toronto pre-construction housing projects and bring them to your attention.