For those contemplating homeownership in Canada’s hottest cities, prices can often seem prohibitively high. Of course, high demand will always cause prices to move skywards. But there are other, less obvious reasons for big price tags in popular neighbourhoods.
For a better understanding of what goes into high real estate prices, read on for three contributing factors.
It’s the classic case that when demand is high, and supply is low, prices will rise. But there are many different reasons that supply can be low in the city where you’re looking to buy. Government regulation can make it difficult for developers to create the type of property that’s most in demand. (In many cities, zoning laws prohibit multi-storey condo buildings in low-rise neighbourhoods.) If there’s a block in the new supply pipeline, prices will jump up.
Good Job Numbers
Cities with booming job markets almost always see a matching rise in housing prices. People will make their way to the area for new jobs, and if the average salary increases, the average buyer’s purchasing power will rise in turn.
High Levels of Immigration
If a city is projected to see a population boost in the next few years, you can bet prices will rise with it. The more people are headed into an area, the more desirable the existing inventory will become (especially since home builders likely won’t be able to keep up with the demand.)