Toronto evolving into a dynamic metropolis

We’ve all heard it before. In fact, I have been hearing it for over eight years (the entire time I have been licensed to sell real estate in Toronto). “So who is buying all these condos?” Of course the innuendo is always the same. The rain it cometh down.

Toronto is a unique North American city. Unlike Montreal, Calgary, Vancouver, New York, Boston, Chicago and virtually and other large metropolitan city, we have substantial residential neighborhoods of single family homes. They have survived and prospered and become sacrosanct. The result is essentially a Manhattanization of our central city. We have the ability to go high in a very small area downtown and a few nodes around the city. Development in the downtown or central region (bordered by Eglinton, DVP, Dufferin and the Lakefront) is limited and becoming more so. Within 5 years available development land in this area will be largely developed. This will drive land, development prices and home pricing skyward.

Canada allows the entry of 250,000-300,000 new immigrants a year. Most of these new Canadians are so grateful to be here that they end up assimilating quickly. They save money, and invest in real estate within a few years. (Something virtually they could never dream of in their country of origin). The bulk of these immigrants (over 150,000) settle in the GTA. Toronto’s population has grown from 3.8 million to 5.2 million over the last 16 years. By 2010 six million people will live in Toronto, making Toronto one of the largest cities in North America. Along with this extreme population growth comes a shift in home ownership. 20 years ago in 1988 only 10% of residential property sold in the GTA were condominiums, today it’s 40%+. That represents a 400% increase in condo demand over 19 years, without necessarily increasing overall home demand. The truth is that many people now choose to live in a condo. If a buyer wants to spend less than $400,000 on a city home it will have to a condominium. The bulk of all home purchases are currently less than $400,000. Today the condo market represents 40%+ of sales, in 10 years it will be 70%. The condominium marketplace is the future and everyone in the industry knows it.

As a city, Toronto has embraced the idea of being livable. No other city in the world is residentially developing their downtown as fast or as well as Toronto is. Several hundred developments have been completed since 1996. Tens of thousands of new city residents have chosen the condominium lifestyle for all it has to offer. Developers from all over North America are coming to Toronto to learn how we have done it. They are hiring our consultants and designers to help them start or replicate what we are doing in Toronto. Toronto is the epicenter of condo development in the world.

Toronto will never go backwards. With all the incredible residential development, new 5 star hotels (Four seasons, Shangri-la, Ritz Carlton, Trump, 550 Wellington, Maple Leaf Square Hotel, The Hazelton and more coming), new Opera House, updated ROM, renovated and expanded AGO, new National Ballet School, and an updated Royal Conservatory of Music. We have seen 30 years of development in just 8 years. Toronto has arrived as a world city.

I lived in Toronto for over 8 years, employed as a real estate sales representative, working for HomeLife Response Realty Inc., specializing in Toronto’s condominium market since 2000. I have enjoyed fantastic success in developing a large following of buyers and sellers looking for that great condominium deal in Toronto. Its fascinating watching people panic and behave as a herd. Smart real estate investors held on and bought more. Short term speculators and investors dumped their property. In real estate, time heals all woulds. 1990 was precipitated by several factors; a sagging economy (negative economic growth), high unemployment, high inflation, high interest rates (over 10%), high public deficits and yes, rampant real estate speculation. All real estate suffered; condos, houses, industrial and commercial. It was bad for everyone, but it was no worse for the condo market.

What is going to cause the next inevitable downturn? The same thing that always does; a combination of negative economic factors (just like in 1990). When this combination takes place in the western world (we’ll all be affected, perhaps not equally) we in Toronto can delight in the fact that this time we will be the least affected as we had one of the smallest increases of real estate values of any city in the world. Toronto has the lowest real estate prices of any city its size in North America or Europe. In the meantime, despite what you may read there is no concern in Canada for the near term recession; in fact we are in the best economic shape of any G-9 country on the globe. As such, we should see a continued healthy real estate market for several years. There is no such thing as a 7, 10, 15 or 20 year cycle. We know that good times don’t last forever; we just can’t pinpoint how long they will last. Buying a home is about lifestyle, family, security and long term investment returns. If at some point your home declines in value don’t sell it. Wait, live and enjoy the fact that it is your home. So much for falling prices.

Successfully yours!

Andrew Dawid