Why is Real Estate So Expensive in Canada?

In this video, we are going to talk about Why Real Estate is So Expensive in Canada. And what you should do if you currently can't afford one.

- **Job Opportunities in Key Markets Makes them More Desirable (Just like LA, SF or NY)**.

Toronto is exploding in terms of growth not only in population but commerce, culture amongst other things. The amount of businesses coming into the city to open offices is growing year after year and does not look like it will slow down anytime soon. This means there are more opportunities for work and people naturally will want to live in the same city where they are growing their career. Now I am sure Vancouver is also experiencing some great business growth as well so that could be a factor but I am not in a position to see that as I live in Toronto. This reminds me a lot of other worldly cities in the United States like Los Angeles, New York or San Francisco. These are major hubs where Real Estate prices have continued to explode over the years. People really want to live in these cities and are willing to pay extremely high prices to do so.

- **Foreign Investors**

Now specifically looking at Toronto and Vancouver, there has been a ton of Foreign Investors from all over the world buying property and investing in the city. This for sure has had an impact as the Government had to step in and place a foreign buyer tax of 15% on the purchase of any residential property. They definitely wanted to slow down all the international people flying in to buy real estate. Now I think Foreign investors are a good thing and a bad thing. It's great because Canada itself is such a diverse country and that is one of our Strengths as a nation so these buyers feel welcome with open arms from us friendly Canadians. On the other hand, people that are growing up, graduating college or starting families in these key markets are being priced out heavily. I can give you my example, there is no way I can afford to buy in Toronto right now. It is way too expensive for me. I choose to rent because I can save a lot more that way to live in the city. This forces people to other areas outside the city or even to move to other Provinces to have an overall lower cost of living.

- **Speculation**

Canadian real estate has been on news outlets worldwide and Toronto and Vancouver are becoming truly world class cities making the demand so incredibly high. Actually so high to the point where builders are scrambling to build more and more to fill this demand. I also think there is a lot of confidence in the key markets that believe it will never come down in value and fall. Which is not a good investing statement. Anybody who knows about investing, knows that whatever goes up must come down eventually. Although there is no saying when that will be right now, nobody knows of course. More demand, is causing more people to keep buying because they think they will miss their opportunity. This creates a bubble type effect on the market and then you get to a point where prices more than double in just 10 years.

- **Immigration**

Immigration can also certainly be a big reason why houses in Canada have become so expensive. Canada is a immigrant nation. My parents and grandparents are immigrants and they came to this country for a new life and opportunities! Canada right now is planning on welcoming 350,000 Immigrants annually by 2021. Canada is also consistently ranked as one of the top places to live especially certain cities like Vancouver so this can be a BIG factor. Canada is a place where people want to move to, that is CLEAR! It's just easy to see that generally when people move here, they naturally move to the largest cities which are the two most expensive markets.


- **Canadian Banks**

Canadian banks are some of the best businesses in the world. The big 5 banks in Canada are globally known as some of the strongest banks on the planet. They are generally found in a lot of investment portfolios around the world and are commonly seen as a great investment. They pay healthy dividends and have grown consistently well over the decades. In 2008, Canadian house prices barely dropped before recovering shortly after while the United States Housing market plummeted. I think its safe to say the regulations we had in place saved our market at that time, but there hasn't been a correction in over 10 years! The Canadian banks have certainly been a big part of this surge in pricing as they have been the ones supplying the financing.