“The new face of a $1.4 million dollar home in Toronto”

I posted this image and caption on my LinkedIn recently. What follows in today’s post, is a snapshot of a brief conversation it sparked with a commentator.

Commentator: “True, and not sure if sad at the same time!”

Stevie: “Well, real estate markets are in transition throughout North America. The same elements are unfolding south of the border: inventory is tight, interest rates are low. This unique combo produces the perfect storm to drive prices northward. The real test of sustainability though, will be where prices sit 2-3 years from today. If the trend continues unabated, then we’ll know a new paradigm has landed and is potentially here to stay.”

Commentator: “That is good to know, what about inflation? Would that be a factor as well (besides inventory/rates)? I am hearing inflation could spike even after re-opening…”

Stevie: “It could, but, the reality is inflation’s trajectory is out of our hands. There’s simply nothing you nor I can do about it. Historically, certain types of real-estate assets have been a good hedge against inflation. But, these are uncertain times as covid has taught us all. From a home buyers/seller’s perspective, a property serves far more utility than just hedging. We also live in it and raise our families there. As long as we are making prudent financial choices with our limited resources, that’s about all we can do.”

Commentator: “How about Real Estate investors? I guess inventory/rates/inflation would be somewhat good then?”

Stevie: “For real estate investors, the perspective to adopt should always be micro, not macro. Price gains are never uniform across geographic regions. The best one can do is to know the market you’re deploying resources in and know it well. Supply, demand, inventory, interest rates and price gains all work in tandem to produce a given outcome. Instead of trying to predict, it’s more strategic to monitor these levers over time and from there, make an assessment of how things may or may not play out.”

Commentator: “Got it, good information, thanks a lot!”