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Formation of real estate prices in Toronto

Due to the fact that real estate in Toronto has been of great interest to investors in recent years, people planning to buy a property for the purpose of investment or free cash flow are constantly turning to me. Many of them are very poorly versed in Canadian realities, so they usually ask same questions with a desire to assess how profitable it is to invest in real estate in Toronto, what factors can increase real estate value, where it is better to buy and so on. Click here to learn more how to buy a home in Toronto without troubles with Michelle.

Before answering these questions, I want to explain the formation of real estate price, taken a detached house as an example. Each house stands on a plot of land, and thus, the resulting value of property consists of two components - the cost of the land lot and the value of the house, built on it. The price of these two components usually moves in two opposite directions - the land becomes more expensive, while the cost of the house is usually reduced with the time. Reduction of home construction cost is explained by objective factors such as natural dilapidation and obsolescence.

And if the house state can be easily corrected with an overhaul (in most of cases, a simple decoration is enough, ex. installation of modern vinyl windows), the obsolescence is already more serious factor. Due to the fact that the welfare of residents of Toronto is constantly improving, the quality requirements for housing are constantly rising too. Those houses, which have been considered large and luxurious 30-40 years ago, no longer fit into these parameters, and does not cause any interest. That is why the cost of the house is constantly decreasing. It is appropriate to draw an analogy with the car, which also loses its value with the time. House, being a product of human labor, as well as all the other products, is subject to the same laws of its value formation - time usually depreciates it.

Today, modern detached house should be equipped in accordance with the latest achievement of technology. Vinyl windows, solid wood doors, advanced systems of heating are mandatory requirements for detached houses.

Marcella Hart for about vinyl windows in Ottawa.

Read more about where it is better to buy real estate property in Toronto

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