Photo: Michael Gil/Flickr
If you live in Toronto, you’ve undoubtedly heard the words “condo boom” thrown around like a hot potato at dinner parties, children’s play dates and the office water cooler.
You might have also heard whisperings of bubbles and rising and falling interest rates. But what’s really going on in Toronto’s real estate market? Toronto Life brought together a panel of real estate’s leading mavens on Thursday to discuss the future of real estate in the city. The panel was hosted at the University of Toronto’s Rotman School of Management with journalist Philip Preville leading the discussion.
Here’s a roundup of what the experts had to say on what will drive the Toronto market in the coming years:
Craig Alexander, TD Bank senior vice-president and chief economist:
“From an economic point of view, there’s a short term and long term story.”
Alexander said both cyclical and a long term patterns will drive real estate prices. The short term driver is affordability: even though prices have gone up, Alexander said, affordability has been good because of low interest rates, and that has propelled the market forward.
Land scarcity, demographics and population growth are part of the longer-term story. Alexander said interest rates will inevitably rise, but the long-term support for the market will be there because of strong immigration and a growing population.
“At the end of the day people need shelter,” he said, and that’s what drives demand.
Paul Bedford, former chief planner for the City of Toronto:
Smart growth and transit “go hand in hand.”
Bedford said that the continued pressure of population growth on real estate demand needs the support of a strong transit system.
With Toronto’s current population of 2.76 million expected to hit somewhere between 3 and 3.5 million by 2031, he said, the City needs to step up its transit game.
“That is a totally different animal than what we’re used to and that’s where transit comes in,” he said.
Paul Golini Jr., Empire Communities executive vice-president and co-founder:
“Don’t wait…buy now because prices are not coming down.”
For Golini, the future of Toronto real estate comes down to a simple supply and demand equation — and he says it’s looking good.
That’s because, Golini said, land constraints in the city mean there is less supply than demand.
Golini added the trend that sees millennials and empty nesters moving downtown also fuels an increased demand on real estate.
“As an industry of developers and builders, we don’t see prices falling anytime soon,” he said.
Eve Lewis, Urbanation president and CEO:
“New sales [are] largely driven by investors buying in to the condo market.”
Lewis said if the investor stays in the condominium market into the future, the number of units sold will continue to rise.
Most of the tens of thousands of people moving to Toronto, Lewis said, choose to settle downtown over the 905-region, absorbing rental units held by investors.
“The reality is that most of those numbers are from the downtown core and most of them are fed by the investor markets,” she said.
Mazyar Mortazavi, TAS president and CEO:
“It’s about the choices around lifestyle as opposed to the choice of just housing.”
Mortazavi, a residential developer, said he’s seeing a change in the types of choices people are making in how they want to live — it’s no longer so much about the white picket fence and two-car garage as it is about schools, transportation services and nearby amenities.
“The demand around homes is what’s going to drive pricing and affordability, but the definition of what a home is is rapidly changing,” he said.
Mortazavi said at the end of the day, people still want to live in a village, but the definitions of what that village is, exactly, is in flux.
“People are making choices around the kinds of communities and places they want to live based on a shift in the qualities and perceived values in what they aspire for in life.”