A marginal buyer is the outlier who pays huge premiums over the consensus price that skilled real estate agents would come up with according to the micro-market and previous sales factors. Although these buyers make up just a small subset of buyers, they actually determine the value of the market.
Some watchers in the real estate industry in Canada can also agree on what extent foreign investors have become such marginal buyers. Many experienced and industry expert agents are able to see an incursion of foreign money.
Cash is flowing from different parts of the world, including Vietnam, South Korea and China, as immigrants are bringing their children over to study in Canada. However, it is important to note that similar buyers still maintain their homes and businesses in their country. Also, many are splitting their time between the two countries.
Many investors from Europe are also interested in real estate investment in Toronto. Not only because it is close to New York city, but also due to the fact that it is so easy hopping across the Atlantic. These investors come from different countries in Europe, including Cyprus, Ukraine and Russia. Some also have banks in Luxembourg.
There’s a lot of competition amongst the buyers. It becomes overwhelming and time consuming for families. Buyers also face daunting challenges in the Greater Toronto Area and the surrounding cities. In many cases, it is difficult to obtain financing.
Across the country, the prices for real estate rose by 1.3% in February compared with the month before. however, in Toronto, the rise for similar period was 2.6%. This actually makes the strongest gain in 5 months. However, although the prices rise in both Toronto and Vancouver, listings and sales are falling in these cities.
According to some economists, the result is that the biggest housing markets that used to be responsible for the largest house-price gains over the years are now heading a tipping point.