2016 seems to be off to a turbulent start for economies around the world. Canada is no exception. I’m sure there are empty outlet store parking lots as far as the eye can see are all over Buffalo, New York right now because of our falling dollar. China’s shaky stockmarket threatens put a drag on other economies, and oil prices keep on slip sliding away. It’s not a coming apocalypse, but these are some significant events to monitor.
In terms of stock investments, I’ll leave that to the experts, but I will add my two cents when it comes to how this early start to 2016 could effect housing market here in Toronto. So, let’s talk Chinese stock markets first. I can say wholeheartedly that I have very little insight into what may happen in China’s plunging stock and how the world will be pulled in. Some have suggested that our interconnected economies will lead to an economic crisis in China that may reverberate to other countries around the world, like the U.S. housing market meltdown did in 2008. Others say as Frankie says: Relax.
What I can tell you, as far as Toronto real estate is concerned, the Chinese stockmarket may put more pressure on the Chinese to seek out more stable investments outside of stocks like Toronto real estate. A very similar thing happened here in Canada and the U.S. when tech stocks tanked in the early 2000’s. Many people turned to real estate as a safer, long-term investment. This did not turn out so well for some Americans, but this is what people do when they are losing money in stocks. They put it somewhere else. I don’t think Toronto would be the top city worldwide where the Chinese would invest, but there is a significant amount of Chinese investment here already (and Vancouver). So, chances are we could see more of it this year because of the stockmarket in China.
You know what else is going to lead to more foreign investment in Toronto and other Canadian real estate? The low Canadian dollar. And our dollar does not seem to have finished its slip. It all has happened so fast. Alberta, once the proudest bird in the chicken house is not looking so healthy these days. Oil and other commodities are less in demand as they were in previous years. A lot of Canada’s economic kick came from these sectors, especially in the Prairies and Newfoundland. Along with the sinking oil prices goes our dollar.
Our low dollar this year may make us think twice about visiting L.A. or Miami or Aunt Minnie’s trailer home in Upper State New York because it will be expensive to travel to the United States whose economy is showing increasing strength.
On the flip side, I would suspect we will see more Americans coming here, not only to visit and dance in the streets at Caribana, but to buy property. And who can blame them? Remember, they just received a 30% discount on our real estate from not-too-long-ago.
This may appeal more to the sellers of Toronto who will see more buyers coming from the U.S., but there may be a silver lining for buyers as well.
This slowdown in our economy will likely lead to an interest rate cut or two. This, in turn, will make rates even more appealing than they are right now for buyers. And you may qualify for an even better rate and possibly more money.
Also, it may take time, but the lower dollar could assist Ontario with its manufacturing exports once again. It doesn’t seem to have happened yet, but we are a much cheaper place to manufacture things now. And hopefully we will finally learn not to depend too heavily on oil, and diversify our economy even more.
Overall, I think Toronto real estate will have a decent year. We may see more foreign interest in our city due to our weak dollar discount. I don’t think we are going to see an overwhelming push of investment from the U.S. or the Chinese to the point where Canadian buyers should be worried en mass, but it does give us some perspective on just how many variables, even outside of the country, can influence Toronto real estate.