It’s hard to say that the year will end with anything other than high prices and a Seller’s market. This has pretty much been the story for 2011 with demand and prices continuing to rise. Comparing 2011 to the previous 5 years, it actually seems the most stable… and boring. Most people agree that a boring 5 to 7 percent tax free increase on the largest investment of their life (primary residence) is just fine, I agree.

If you’re my age, in your thirties, I think most of your wealth will be created through real estate. With the stock markets no better off than 10 years ago and the global economy suffering with no end in sight, it’s very likely your wealth has mostly been created by your appreciating home or condo. I don’t believe this pattern is very likely to change anytime soon.

This is quite contradictory to all the best intended advice given to us from our previous generation. The strategy of diligent saving, dollar cost averaging and other Wealthy Barber tips haven’t produced significant benefit. The most rewarded have been the one’s the most highly leveraged in real estate. I would never advise over-leveraging beyond your affordability but it will be interesting to see who’s ahead in the end.

Prices are up 7.2% since last November. That’s quite a big jump but last years Fall was very soft. Analyzing the orange line (median price) on the above graph shows quite a linear increase as opposed to an exponential curve… which is a good thing for stability going forward. My clients only regrets are not making their purchasers sooner but there seems to be no change to come in that regard. With the world economy suffering, many internationals see Toronto’s stability as the place to invest their assets. With under reported inflation already affecting our cost of living, cash in the bank is quickly eroding. With no hint of interest rates to rise anytime soon, if you’re planning on buying in the next 5 years, it’s most likely that delaying will be only be more expensive.


*Graphs apply to most recent C01 district data.