The Real Deal On the Changing Landscape of Real Estate 

The real estate market has changed a lot over the years! With emerging technologies, economic and political changes, it’s no doubt that the market has adapted over the years. Understanding these changes can come in handy for anyone entering or re-entering the market. To get a better understanding, it is important to understand the past, present and the possible future of the real estate landscape. 

80s Interest Rates to Now….The Changes
Just imagine paying over 18% interest on a 30-year fixed mortgage…sounds crazy, right? You would think this would not have ever existed but at one time it was a reality for many home buyers. In 1981 the average rate was almost 17%. In order to tame double-digit inflation, the Central Bank drove interest rates higher which resulted in mortgage rates to top out at 18.45%. 

Back in the early 80s, due to high interest rates, it made housing much more affordable in comparison to today’s markets. Interest rates now are lower due to a number of reasons and that is thanks in large part to the Bank of Canada which has ensured to go great lengths to keep rates low to help the economy recover.

Real Estate Bubble Crash of the 90s
In the late 80s, everyone thought that the housing prices were going to rise and that turned real estate into a compelling investment. This caused more people to jump into the housing market in hopes of making a fortune and this caused an artificial increase in demand. Suddenly housing became scarce, which further increased the price. This gave developers aptitude the chance to change the landscape of real estate in the GTA by adding many condo buildings, especially in the downtown core. 
During the peak of the bubble the borrowing cost started increasing and the 5 year fixed mortgage reached 12.7%. Coupled with the early 90s recession, a spike in unemployment and a drop in the inflow of immigrants to the area, housing prices in the GTA collapsed, hence the 90’s crash. However, during this time it became a “buyer’s market” with a high influx of supply. Unlike today’s market which brings “bidding wars” to properties due to the low supply of houses. 

Real Estate in the 2000s 
Who could forget the recession in 2007 where the financial crisis shattered business and consumer confidence! This recession was also felt worldwide. This recession also affected the real estate market as well as house prices decreased by approximately 11% from the peak of the fourth quarter of 2007 to the start of the first quarter of 2009. By the end of 2009, the combination of an improving economy and very low mortgage rates led to a rebound in Canada’s housing sector.

Present and Future Real Estate Market
The Millennials could potentially be the biggest home-buying group in history and even bigger than their baby boomer parents. Their use of technology (such as Apps, MLS, & E-Signature) in real estate has been changing the way business is done and changing the landscape of the market. They also love to have information at their fingertips and are a group to watch for in the real estate market. Then we have the Baby Boomers to watch out for as well as many of them will be retiring very soon which could cause a big influx of homes on the market. With changes happening with these two groups of generations it can affect the market but hopefully it will be a gradual shift.
 
Even with all the changes that have happened in the real estate world over the years, the one thing that hasn’t changed is the knowledge and experience that a real estate professional can offer you when you are buying or selling your home.