Whether you’re interested in buying or selling in Toronto’s real estate market, there are a few factors you should be aware of that are driving up prices and demand across the city.
For many years, there have been talks and predictions that the climbing price of Toronto’s real estate would come to a halt or even drop but none of these guesstimations have proven true.
So what are the main reasons that Toronto’s real estate prices continue to rise? Here are four economic factors to consider when evaluating Toronto’s rising real estate prices.
1. Supply & Demand
One of the main factors increasing Toronto’s property prices relates to lack of supply in the Greater Toronto Area. Continuously, Toronto home buyers are going into bidding wars and competing against multiple offers, because of lack of supply which in turn is creating higher real estate prices.
This supply issue poses true to all stages of purchases, however, first-time home buyers trying to get into the market at entry level prices (around the $400,000 price mark) are being affected the most.
2. World-Class City Contender
As Toronto keeps making a name for itself as one of the world’s up-and-coming cities to live in, people from around the globe are listening. And as a city, Toronto is working to live up to world-class expectations. As the fourth largest city in North America, Toronto trails behind a few of the top internationally known cities; New York City, Los Angeles and Mexico City. Real Estate prices in New York City and Los Angeles are much higher than those we see in Toronto; however, as we continue to grow and gain international awareness, the cost of living will be reflected across the board which will include real estate prices.
3. Population Growth
Over the next 20 years, the population of the Greater Toronto Area is expected to grow by roughly 3 million people, states the Ontario Ministry of Finance. Which means the city is projected to grow by an average of 150,000 people per year. With these expected rising numbers of residents and the lack of housing supply across the city and province, we can only expect that real estate prices will continue to rise as the competition in the market tightens for buyers.
4. Speculative Investing
As Toronto grows speculative investors interest grows parallel. Speculative investing is when a person purchases a home in hopes of turning a profit and does not live in the purchased home. These investors usually purchase a property and in turn sell it quickly to capitalize on increased real estate prices. In Toronto, speculative investing has become more popular with the influx of housing prices. A recent article in the Globe and Mail states, that in Toronto’s hot market of April 2017, every three of ten properties purchased were by speculators.
Those waiting for Toronto’s “real estate bubble” to burst may be waiting a very long time as these above economic factors show no signs of the market slowing down.