AFFORDABILITY IN TORONTO'S CONDO MARKET
Affordability was measured as the percentage of household income spent on a mortgage for the average priced condo. By the first quarter of 2009, it was down to 13%. The high in 2007 was 17%.
Besides lower condo prices from 2007 – about 7%, interest rates have fallen even more. Today mortgage rates below 4% are common, regardless of the term. Compare that to 6 and 7% just over a year ago!
Potential buyers have been holding off because they want to hit the bottom of the market – well it passed them by. February was the magic date. It’s amazing that more people want to buy when prices are rising rather than when prices are falling. It is human nature. But for people who know real estate and who invest for the long term, you always buy when prices are falling because the long term trend is always upwards – at about 3% per year plus inflation and you make the most when you can buy below the long term trend.
Anyone else share these views?