Now Is the Time for High-Yielding Investments in Toronto Real Estate

There’s still a month to go in 2015, but Toronto real estate has already smashed all previous records for both sales and price figures. The strong annual gain underscores the growing confidence buyers place in home ownership when it comes to the Greater Toronto Area (GTA).

It also continues to be a great time to get exposure to real estate in Toronto as an investment class, particularly through a mortgage investment corporation (MIC), which is a company that manages a diversified pool of mortgages with high-yielding investments in Toronto real estate.

November GTA Sales Break All Records

This year was supposed to be the year Toronto’s housing market was going to take a breather. Instead, the city’s hot housing market soared into record territory in November.¹

At 7,385, home sales in Toronto were up 14% on a year-over-year basis in November. At the end of November 2014, 6,476 homes had sold in the city of Toronto. So far in 2015, a record 96,401 sales have taken place, besting the previous record set in 2007. And there’s still a month to go before year end.

Thanks to a strong demand for home ownership in the GTA, prices have also been climbing at a blistering pace. In November, the average price for all transactions rose 9.6% to $632,685.

Strongest Growth in Low-Rise Homes

As is often the case, demand outstripping supply is resulting in more and more bidding wars. And higher prices.

But it’s all about location, location, location.

While the average sale price of a home in Toronto climbed 9.6% year over year in November, the strongest growth was reported in low-rise homes, which include detached and semi-detached properties.

When it comes to detached homes in Toronto, the average price was up 8.8% to approximately $1.01 million. But the average selling price for a detached home in the 905 area was up 13.5% at $762,326.

The average price for a semi-detached property in the 416 area increased 12.4% to $750,608; in the 905 region the average sale price for a semi-detached property was up 12.5% at $504,928.

Strong price growth in the GTA is no longer limited to the downtown core. Competition has strengthened across the City of Toronto and surrounding regions. And with mortgage rates expected to remain near record lows for the foreseeable future, the GTA will continue to be an excellent investment opportunity.

Mortgage Company of Canada Inc. – Toronto’s Private Mortgage Lenders

It takes a lot of available capital to buy investment properties in Toronto and the GTA—something most Canadians do not have. That being said, there is a way you can take advantage of Toronto’s record real estate market. Instead of investing in real estate, it can make more sense to invest in a high-yielding residential real estate mortgage.

During the gold rush there was a popular axiom: “You can mine for gold, or you can sell pickaxes.” Some of the richest businessmen from that period didn’t mine for gold but sold supplies to miners instead.

The same can be said for real estate. You can either spend a lot of money buying property or you can gain exposure to Toronto’s real estate market by investing in a company that manages a diversified pool of mortgages.

A mortgage investment corporation provides private mortgage lending services to residential and commercial borrowers. Investing in a MIC that provides a diversified pool of mortgages can help you broaden the scope of your portfolio with high-yielding investments in Toronto real estate.

As an alternative investment strategy, a MIC is designed to generate positive returns regardless of what the broader market is doing. On top of that, a well-managed MIC should continue to generate good yields even while equity markets under-perform.

To find out how you can diversify your investment portfolio with Canadian real estate, contact Mortgage Company of Canada Inc. by phone at 905-886-5352 or 866-318-7222, or by email at investor.relations@mcoci.com.

Sources:
1.“GTA Realtors Release Monthly Resale Housing Figures; Best Results on Record for the Month of November,” Toronto Real Estate Board, December 4, 2015; http://www.trebhome.com/market_news/release_market_updates/news2015/nr_market_watch_1115.htm.