Now is the prime time to invest in real estate in the Greater Toronto Area (GTA). Although the supply of detached, semi-detached and townhomes has trended downwards over the last 10 years, the demand from buyers has remained strong. This has resulted in more competition between buyers and strong growth in property prices. If you are looking to take advantage of Toronto’s soaring real estate market, consider investing in a mortgage investment corporation (MIC).
Toronto Real Estate Is a Great Investment Opportunity
During the first 10 months of 2015, a record 124,123 new and resale homes were sold in the Greater Toronto Area (GTA).1 While new home sales were consistent with the 10-year average, the mix and type of new homes sold have changed. Builder inventory levels of new homes have remained at their normal range of 26,388; but it is high-rise condominiums that comprise more than 81% of these homes.
In fact, the number of new high-rise homes in the GTA has increased dramatically over the last 10 years. At the end of October 2015, there were 21,408 new high-rise homes for sale in the GTA, compared to 13,006 in 2005. The average price of a new high-rise is up 53% over the same time frame at $440,382 in 2015 from $288,587 in 2005.
Builder inventory of new low-rise homes (which includes detached, semi-detached, and townhouses) was at 4,980 homes at the end of October—a near record low. According to the most recent data, there were a total of 10,014 low-rise properties for sale at the end of October. Ten years ago, at the end of October in 2005, there were 16,079 new and 12,773 existing low-rise homes available for sale.
The supply of low-rise homes has trended steadily lower over the last 10 years while demand, has remained strong. This points to a seller’s market and to continued price appreciation as competition grows between buyers.
Case in point: The average selling price of a new low-rise home at the end of October 2015 was $802,376 —more than a 100% increase over the average price of $387,369 in 2005. Single-detached homes experienced the biggest year-over-year price increase in October with the average price of a new single-detached home in the GTA being $962,312 in 2015.
Traditional Mortgages Out of Reach for Most Torontonians
To afford a new detached home in the GTA with a 20% down payment, a buyer would need to have an annual income of $174,854. While it is possible to purchase a home with a down payment of just 5%, to do so requires an even higher income level. .
According to the most recent data from Statistics Canada, the median total family income in the GTA in 2013 was $72,830.2 The increases in wages are not keeping pace with the increases in home values in the GTA.
In addition, tighter mortgage rules and the big banks’ conservative lending polices mean it’s very difficult for the average Torontonian to get a mortgage. The most viable option for those who have been turned down by traditional lenders is to turn to private mortgage lenders.
Mortgage Company of Canada
Most Canadians who want to invest in the housing market do not have enough personal money to purchase numerous properties. In addition, it takes considerable time and effort to manage investment properties. .
The easiest way for Canadians to take advantage of the diversity of new and existing homes in the GTA is to invest a portfolio of mortgages through a mortgage investment corporation.
Mortgage Company of Canada Inc. (MCC) is a mortgage investment corporation whose objective is to provide investors with an attractive risk-adjusted return by primarily investing in first and second residential mortgages on single family low-rise homes in the GTA. MCC’s experienced management team employs a focused lending strategy and follows rigorous underwriting analysis.
To find out how you can diversify your investment portfolio with residential low rise housing in the GTA, contact MCC at 905-886-5352 or 866-318-7222. Or you can email firstname.lastname@example.org. In order to make an investment in MCC, an individual must qualify as an “Accredited Investor”.
1.“Supply Dynamics are Impacting GTA Home Prices and Shaping Market,” Toronto Real Estate Board, November 25, 2015; http://www.trebhome.com/market_news/release_market_updates/news2015/nr_bild_ownership_demand_112515.htm.
2.“Median total income, by family type, by census metropolitan area,” Statistics Canada, November 27, 2015; http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm.