Will there be a mass influx of people coming to Toronto?
October 01, 2021
Last year and into 2021, the COVID-19 pandemic forced many of us to reconsider where and how we should be living, and where and how we should be working. The 400-sq.-ft. downtown condominium was perfect for a short walk to work, quick access to nearby restaurants and nightclubs, and transit was nearby for those longer trips.
With many people working from home in a cramped space, indoor dining closed, and transit still a little worrisome, people are struggling with their decision regarding the best place to live.
Every Torontonian has a slightly different version of this pandemic-reconsideration story, with questions like: Do I want to raise my kids downtown? Do I want to be crammed closely into elevators, streetcars, cubicles or tiny boutique fitness centres? A lot of people are asking themselves if a suburban lifestyle will keep them safer, or will a move to a much smaller municipality outside the GTA be better for their general well-being and health?
We have witnessed a massive shift over the last 20 years, with the complete revitalization of downtown Toronto, the building of new office buildings and especially new highrise condominiums. The Toronto population has soared in recent years. Many buyers have chosen to live in downtown condominiums for lifestyle and environmental reasons; they want to be walking distance to cafes, shops, parks, friends, hospitals, and employment, all while reducing the need for development on the outskirts of the GTA that eats up greenfield lands and increases the reliance on personal automobiles. They don’t want to pay for a parking spot, a car lease, license fees, or insurance for a vehicle that sits in a garage most of the day and pumps out pollution the rest of the time.
A second group of people are living in downtown condos and rental apartments for affordability reasons; they would much prefer to live in a single-family detached home in an inner-suburban community with a big backyard and two parking spaces. However, the number of years someone would have to save for these houses is becoming insurmountable. They need to be as close to work as possible to save time and money, and centrally located highrise buildings fit that need for them in the short term.
Strong as ever
Because of the pandemic, many predicted a mass exodus out of Toronto, but from the looks of the data, people have decided to stay. The August 2021 data from the Toronto Regional Real Estate Board shows single-detached pricing up 21 per cent annually, while average condo prices have risen nine per cent year-over-year. Active listings in August were down 51 per cent annually – despite the sky-high prices, people aren’t selling. According to BILD’s latest release, the benchmark price for new condominium apartments in July was $1.09 million, which was up almost 10 per cent over the last 12 months, while the single-family market has seen prices rise 28 per cent.
Demand is clearly as strong as ever, and this is in the absence of the type of immigration we’re used to. In fact, supply is way up, too, on the apartment side. According to data from CMHC, there were 18,266 condominium and rental apartment units completed in the Toronto Census Metropolitan Area during the first seven months of 2021, 46 per cent more than last year, and 86 per cent more than in 2016.
Clearly, there is no exodus, but a mass influx, occurring.
More and more people will come to the GTA and Toronto, if we build units to accommodate them. We have a record number of units coming this year, but it still won’t be enough. If you’re in the market for an investment condo, there will be future demand for that unit. Think long-term hold, don’t be afraid of small (tiny equals more affordable). Think about how your future tenants will get to work, where they will eat, what can they walk to, and what can they afford? How is the neighbourhood changing, and can you contribute to its growth and success?
Surround yourself with a strong team, do your own research, and believe that people will most definitely come to Toronto.
About Ben Myers
Ben Myers is President of Bullpen Research & Consulting, a boutique real estate advisory firm, that works with landowners, developers, and lenders to better inform them of the current and future macroeconomic and site-specific housing market conditions that can impact their active or proposed development projects. Follow Bullpen on Twitter at @BullpenConsult or find Ben at bullpenconsulting.ca