How Foreign Buyers Are Affecting the Toronto Real Estate Market

The current recession has had a dramatic impact on the housing market with so many people losing their jobs and being unable to make their monthly mortgage payments. The numbers of people who have no other choice but to default on their mortgages forcing lenders to foreclose on the properties is rising each day. Not only that but the dollar was weakened on the market so that it is not worth as much when compared to other currencies of the world. Many are starting to wonder if there is any relief in sight or if conditions will worsen and become similar to the days of the Great Depression.

There are numerous homes on the market all over Toronto at unbelievably low prices. One has to wonder why they are not selling at such rock-bottom prices, but would-be buyers are having difficulty arranging the funding because of tighter lending restrictions. They are finding it increasingly difficult to qualify for mortgages because they cannot afford the payments or are unable to come up with the required downpayment. As a result many first-time home buyers have decided that it is better to wait until the market starts to level off and rent a home for now.

There is a bright spot in all of these depressing conditions, and that is that the time is ripe for foreign investment in Toronto. This is encouraging for those in the housing market. There is speculation that interest from European buyers is likely to increase in the next few months. The decline in house prices has made this market very attractive to foreign investors because of the exchange rate on the US dollar into Euro. There is a possibility that foreign home buyers will be the replacement the housing market needs for the first-time home buyers who have now been excluded.

Foreign buyers could give those who want to sell their homes in Toronto the relief they are looking for at the present time. Although there are many homes already on the market, there are many more that could be, but the homeowners are taking the cautions route and waiting for just the right time to sell. It could provide them with the opportunity to sell a home that they can no longer afford or give them the chance to upgrade to a larger property.

According to reports from mortgage brokers, there has always been interest in the Toronto real estate market from foreign buyers. However, this interest has increased by about five times the normal amount in the past year alone.

Why the housing market so inviting for foreign buyers? The fact is that a buyer from a European country would not need to have as much money to buy a home in Toronto as the residents of the country would because of the falling dollar. A down payment of $50,000, for example, is the equivalent of 34,000 Euros. Just a year ago when the dollar was trading higher, a buyer would need 38,000 Euros for the same equivalent in US dollars. Therefore, foreign buyers do not have to invest as much money in buying a property in the Toronto as Canadians do.

Toronto real estate agents and sellers are focusing their interests in making sales on overseas clients. Many properties are being advertised in Europe, especially luxury homes that have been on the market for quite some time with no interest being expressed by local buyers. One of the advertising mediums used to get the word out about the homes for sale in Toronto is the Internet: http://www.nicerealestate.com/ - It is not as expensive as TV and radio ads or that of advertising in newspapers and magazines and reaches a greater number of potential buyers.

Although foreign buyers will not be able to completely revive the housing market and pull it out of the recession, it is being viewed as a interim measure of relief.