Last week, I sat down with Don Campbel, Founder and Senior Analyst at the Real Estate Investment Network, to ask him some pressing questions relating to real estate projections in Ontario with relation to Alberta and the US. Don provided very interesting insights — you can read the exchange below.
Addy: What do you project for Toronto in terms of interest forecast and prices?
Don: There are roughly 3 million people in Toronto so you can’t call the market one market per se. Having said as much, the trend will be for ground oriented units to see a continual rise in prices and because their prices are so high, we will see the average price in Toronto to continue to push upwards.
In terms of the Condo Market, analysis of the figures over the last few years has shown the prices to be relatively flat; what’s driving these prices up is the ground oriented units, the duplexes and so on. Thus, the Condo Market will continue on. With a lot of new units coming on, the transaction will be at a higher price and this will bump up the average sale prices. The ground oriented units, however, is where the real money will be in terms of capital appreciation.
Addy: Moving to Alberta, with the unemployment and oil prices, what are the projections for Ontario; will it be booming or will it see an effect from the slump in Alberta?
Don: In my 20 years of studying real estate, nobody in Ontario has really wanted to talk about oil up until now, yet it’s interesting because we must realize that we are one country — it’s not Alberta’s oil, it’s Canada’s oil.
As soon as Ontario stops getting handouts from Ottawa, the Ontario government has to restrict and/or increase taxes. The slowdown in Alberta is going to affect Ontario in terms of budget and politics. However, as far as the housing market is concerned, not at all.
Interest rates will continue to be low or lower than even expected which will help support Ontario Real Estate Market. However again, make note that there isn’t really an Ontario Real Estate market and as such, there will be some cities that will outperform and some will not do so well.
Addy: Do you see an impact in smaller Ontario cities because of the US market coming online much better now?
Don: I think so, but it’s not going to be like the olden days. Our previous premier used to say the world would be perfect with a low dollar and the US market recovering; now we have that, but the effect isn’t the same.
We’re going to see towns like Barrie, Alliston, the Tech Triangle and Hamilton do incredibly well over the next little while. We will see some manufacturing come back but also the Canadian dollar being low shows our product is 20% off — literally on sale.
Having said as much, now we are competing with the international market; Mexico just as much if not more. I don’t expect to see a massive impact but we are going to see some positive growth
Looking at the stats, Ontario for 2016 is going to be one of the top two provinces in terms of economic growth which means GDP Growth that brings on job growth and the job growth subsequently brings on population growth, but it’s going to be very different this time.