GTA house prices on the rise.

Has Toronto real estate become a commodity difficult to put a price on?¬†Let’s just say that you go to your local variety store on a daily basis to buy a bottle of water at $2 per. Then, one hot, humid summer day, the power goes out and your local store doesn’t have any water, cold or otherwise. As you leave the store, you spot a kid pulling a red wagon with a cooler on top. In the¬†cooler he has one ice cold bottle of water. Now, how much are you willing to pay for the same bottle of water you have been buying for two bucks, and will the kid be asking regular price for it? Not really!

Similarly, real estate is a commodity. As such, it trades up or down based on the supply and demand principle. Are we focused on measuring value based solely on comparable sales and year over year market increases, and are forgetting the intangible value placed on current real estate prices based on the current low supply of homes for sale in the GTA?

This principle worked in reverse, in the 90’s. Each property that sold set the new low, and the next sale would invariably sell even lower than the last. Why? Lots of supply and very little demand intangibles!