It’s a topic that is thrown at me several times a day right now. What’s going to happen to the market? Is it going to crash? When will it slow? Is there still upside potential? Should I sell now or wait?

Here’s my prediction. It’ll be interesting to check back in a couple of years and see if I was right.

Back in September of 2013 I was interviewed by Bloomberg News and they asked me back then what was going to happen. I remember vividly telling them that the Toronto market still had a long way to go when you compare it to Vancouver and world class cities like New York, London etc. Relatively speaking Toronto was a bargain at the time and people around the world clued into it and took advantage. Despite what a lot of “experts” predicted I was right on the money. But now times are noticeably different.

I showed a property last week in Oakville listed at $899,900. It was built in the early 80’s and had not been updated since new. In fact it was in pretty rough shape needing about 150k in work – new brickwork, kitchen, bathrooms, flooring, walls patched and painted, landscaping – you name it, it needed it. They held off offers on it and it sold firm with no conditions for $1.26 million. In my opinion that’s absolutely insane! I can’t confirm 100% but the buyers were not residents of Canada. So what’s happening? Vancouver’s market went crazy and now the average detached home is $1.5 million. With Vancouver passing their laws restricting foreign buyers, the money from China is flowing into the GTA. It’s still very easy for a foreign buyer to buy a property in Canada and as Canada is considered one of the safest countries in the world and very close to U.S. it looks like a great place to park money. A lot safer then the unpredictability of China’s government.

The Trump effect is driving the prices up. People from countries other than China who are experiencing the U.S. travel bans are not too keen on starting a new life in the U.S. anymore so Canada is the next (and way better in my opinion) alternative. Safer, health care, better education etc., etc. They’re leaving their lives behind in their home country and investing their savings in real estate in Canada. Another factor driving up pricing.

Remember, in the grand scheme of things when people think of Canada and consider moving here they think of Vancouver or Toronto and from what I’ve been told Toronto grows by over 150,000 new residents per year, outpacing every other city in the country. With Toronto being cheaper than Vancouver and not having the strict offshore buyer policies, Toronto is still growing.

Money is cheap and it will remain cheap for a long, long time. Interest rates will nominally and very slowly increase and the reality is, we will NEVER see interest rates on mortgages hit what they did in the late 80’s. At least not in the next 75 years. It CANNOT happen as if the banks raise rates too quickly or too high the whole country will be thrown into a depression – not a recession. It would be catastrophic. In fact it may take decades for the rates to even get over 5% again as so many households are over leveraged and living on a shoestring.

Having said all that, here’s my prediction. The market will continue to be strong for the next 6-9 months with it being a sellers market, resulting in prices going up. In 9 months or so the inventory will start to increase after the buyer pool has been eaten up and prices will finally stop rising. But, 9 months from now I think we’ll see 15-20% appreciation from today’s prices. In a year from now the average home price will be higher than it is today but in 2 years it will be roughly the same. Prices will then remain stagnant for years – maybe even 10 to 15.

IF the government jumps in and passes a crazy law or introduces a ridiculous tax it could accelerate things on the downside but they’re walking a tightrope with this and they know it.

It’ll be an interesting few years!