I am extremely lucky to live in one of the best cities in the world; and that’s not just my opinion; Toronto is consistently ranked amongst the top 10 “Most Livable” cities globally. It’s safe, welcoming, and cosmopolitan, all great reason for why people want to live here! As a result, Toronto has seen substantial growth in housing prices in the last 10 years and affects everyone from those buying houses and condos, as well as those renting.
As a Realtor in this great city, I answer questions from Buyers and Sellers everyday. One of the most frequent questions I get is, “why is Toronto so DAMN expensive?!” In fact, I get it so frequently, I’ve decided to break this down!
it’s been a while since I’ve studied Economics at Ryerson University, but one of the most simplistic models of Economics is Supply and Demand. Simply put, this model demonstrates that there is a positive correlation between demand and price and a negative correlation between supply and price.
Supply of Homes in Toronto
Toronto has limited land to build on and therefore limited to the number of homes it can offer. In fact, its supply of housing is so low, that in 2018, the vacancy rate in Toronto was well below the national average at 1.1%. Hoping to offer more supply to make living in the city more affordable, the city is building more condominiums towers and rental building and fewer freehold homes on larger lots. However, with so much demand to live in the city, housing will always run short of supply in the city of Toronto.
Demand for Homes in Toronto
So why is there so much demand to live here in city?
1. High Immigration: Toronto is a growing city. Census Data shows that from 2006 to 2016 the GTA added about a million people! That’s roughly an average of 100,000 every year and in 2019 we are expected to grow by approximately the same amount!
2. The Job Market: Toronto is Canada’s hub for business and finance which brings people from all over Canada and the world to explore the limitless opportunities that his great city has to offer!
3. It’s Canada’s most vibrant city that is culturally welcoming and diverse and offers entertainment and attractions for people of all backgrounds, interests, and ages.
Toronto is expensive, but is it really expensive?
Expensive is a relative word. In fact, when you compare it to the other metropolitan cities, Toronto’s affordability problem doesn’t look so bad – on a global scale, which may suggest that there is still much more room for prices to grow!
Now with a better understanding of why it’s so “expensive,” along with the idea of being “not-so-expensive on a global scale,” my hopes are to have altered the perception of a balloon being overly inflated to a more realistic one, one of a hot air balloon with limitless opportunities.
If you have a goal to own a home in 2019 and to begin reaping the benefits of owning property in this growing city, I would love to help you achieve them. For more information, please give us a call at 416-888-9222.