Home Realty: Toronto Housing Market Can’t Be Stopped
Strong fundamentals mean it’s headed upwards
The construction consulting firm Rider Levett Bucknall recently released its RLB Crane Index for the third quarter of 2018, which is a report on the number of construction cranes in major American and Canadian cities during the most recent quarter.
Guess which city topped the list? For the third time in a row, it was Toronto, which nabbed the No. 1 spot with 97 cranes (that’s up from 88 in January, and 72 a year ago). Interestingly, 85 of those cranes are being used on residential projects. In case you’re wondering, Seattle was a distant second on the list, with 65 cranes, followed by Chicago (40) and Los Angeles (36).
All those construction cranes in Toronto can only mean one thing: the city’s condo market is thriving. And with strong fundamentals underpinning its growth, the market is headed nowhere but up, despite what naysayers may say.
The market is being driven by ongoing migration to the GTA, which sees 100,000 new arrivals each year on average. All those people will need to live somewhere.
The Toronto market is also being fuelled by low mortgage interest rates; yes, they’ve been hiked in recent months, but they’re still quite low compared to historic rates (recall mortgage rates topped out at a whopping 18.45 per cent in the early 1980s).
Then there’s the fact that the lowrise housing market continues to face serious supply challenges, with far more people looking for detached homes that simply aren’t available, or are far too expensive for the average buyer to afford.
This has shifted momentum to the condominium market, which had its best year in 2017, with more than 36,000 new condo sales, according to the Altus Group. Hence the reason why we’re seeing so many construction cranes dotting the skyline.
The Toronto condo market’s momentum is being propelled by investors looking to snap up units to rent out to desperate apartment hunters in a city where vacancy hovers around 1 per cent, and by first-time buyers, who have all but given up on the dream of owning a single-family home. Plus many boomers are now moving out of larger homes and want to live in condos for their convenience and central locations.
Yet affordability continues to be significant problem with pent-up demand for lowrise homes, which, owing to a chronic shortage of developable residential land, can’t be built in large enough quantity to supply the market.
Toronto’s housing market is perennially one of the world’s top performers, and it shows no sign of slowing down anytime soon.
Some observers persist on maintaining that we’re due for a severe correction, that the market can’t possibly remain this strong for this long — surely the boom will soon turn into a bust, they say.
But critics have been trying to count out the GTA housing market for years, and yet Toronto continues to defy the naysayers, its condo sector especially.
All those construction cranes dotting the sky are testament to the vigour of Toronto’s housing market, which actually can’t produce units quickly enough to meet demand. This is a city that is attracting people from around world in droves, whether it be for job opportunities or simply to live in a place that is peaceful, safe and culturally diverse.
Doomsayers might be disappointed, but the GTA’s red-hot real estate market refuses to cool off.
Debbie Cosic, CEO and founder of In2ition Realty, has worked in all facets of the real estate industry for over 25 years. In2ition.ca