What is it that drives the market?  Time and time again, I get this question asked when I talk to an investor:

“Where should I invest and how do I know if the price will go up?”

I use the following factors to determine the answer:

1. Employment
2. Population trend (the desirability of an area)
3. Supply and demand

People want to live in a city where there are jobs.  The more jobs there are and the better the employment opportunities a region offers, the more people will want to live there and thus drive up the demand for real estate.  For example, Fort McMurray, an oil town in Alberta, has seen tremendous growth in real estate prices because there are lots of jobs around when the oil industry was booming but now these same housing prices are slipping because the oil rigs are cutting back production and laying off employees, which equates to less jobs.

Another factor to consider, when deciding where to invest, is the desirability of an area.  In other words, the more desirable an area is, the more people will want to buy and reside there, thus causing a limited supply of housing, and in turn, will drive up the real estate market prices.  What determines a desirable area to live?  Although this can be subjective, I believe the majority will agree with me that you would prefer living in a neighborhood with low crime rates, great amenities that are within walking/driving distance, and of course reputable schools, to name a few, than to live in an area that is highly populated with greater crime rates and on busy high-traffic streets – not that these are not good places to live, but the desirability of this type of area versus the latter, in my opinion, is a little less desirable. 

Many areas in GTA are seeing a seller’s market because of the highly desirable area of limited supply of homes for sale.  Every year there are more than 150,000 people who come to Ontario while a majority of them want to settle in GTA.  All these people will need a place to stay.  And due to the limited supply of real estate on the market, the sellers can ask for higher prices in this very competitive marketplace.

Hence, I conclude that employment, desirability of an area, and the supply and demand factors all contribute to the rise of the real estate prices.  This rule, I go by, is not just for the novice investors but for all investors, seasoned or not!  If you would like to learn more about how or where or even when to invest in real estate, feel free to contact us and we are always excited to help you on your journey to wealth-building!