Toronto is a major Canadian city situated along Lake Ontario’s northwestern shore. Wikipedia describes the city as a dynamic metropolis with a core of soaring skyscrapers, all dwarfed by the iconic, free-standing CN Tower. Toronto also has many green spaces, from the orderly oval of Queen’s Park to 400-acre High Park and its trails, sports facilities and zoo. There are many reasons why people flock to this city and it all plays into how the real estate market performs. Here are some things to consider when investing in the market there:
Toronto’s strength is based on a diverse and stable economy. Toronto is the fastest-growing metropolitan area in the US and Canada and Canada’s tech hub (several high-profile tech companies are setting up shop including Uber, Pinterest, and Microsoft to name a few). This drives a constant stream of people moving into the city because of job opportunities. Land is also scarce in Toronto which means the supply of residential properties is limited. With limited supply and increased demand, real estate in Toronto can appreciate quicker than other cities.
Toronto’s residential real estate is backed by an actual need for housing. Even with many condo projects in the works, Toronto isn’t approving housing fast enough, driving the need for programs such as its Housing Now program. Because Toronto’s residential real estate is driven by real demand, there has historically been more stability in the Toronto residential real estate market, making it a lower risk compared to other cities. That said, while it’s impossible to know what the future holds there is speculation that the impacts from the COVID-19 pandemic on the Toronto condo market will see a drop in prices, some going so far as to say it will be a steeper drop than the 2008 recession.
Toronto’s steady demand for housing trickles down to the rental market – generating stable rental income for investors. As property prices remain high in Toronto, there is a growing percentage of people who can only afford to rent. Although there has been a small dip from the COVID-19 pandemic, this translates to a high demand for rental properties in Toronto and low vacancy rates.