If you are asking if there’s a Toronto housing and condo bubble, the answer is yes. Prices in the Toronto real estate market have appreciated over the years, and it seems that prices aren’t going to adjust any time soon. However, if you are bothered whether it’s ideal to buy houses or wait for the market to crash, our experts have your questions answered below.
What Is the Toronto Housing and Condo Bubble?
Toronto housing and condo bubble are simply increasing demand and growth of house prices based on external factors and unjustifiable speculations. These factors could be the number of tech jobs, an influx of foreign investments, etc. When there’s a high level of speculation, people rush into the market to buy to sell for a higher profit, forcing the prices to go up.
Toronto Housing In Relation to Other Countries
Surprisingly, the housing market in Toronto has been resilient compared to Seattle’s real estate and real estate markets in other countries, despite the pandemic. There’s been an increase in demand for single-family houses because people demand more spaces for offices and other commercial sites.
What Is Expected for Toronto Housing In the Years to Come?
Judging from the upward trends in the market, our housing team doesn’t expect the Toronto housing market to slow down. In other words, house and condo prices will continue to go up if the demand outweighs supply, more tech jobs become available, and speculations about the market remain upbeat.
The following factors are what drives the real estate prices up in Toronto.
Rising Demand for Housing and Condo
The rising demand for housing and condo and the low supply is a significant factor that drives the Toronto housing and condo prices. When supply doesn’t meet demand, the effect will be a price increase.
Plus, there’s lack of land to develop due to legislation, causing stiff competition among developers, and eventually, buyers in demand. Apart from that, developers rely on financing to build new condo units, considering the high cost of steel, glass, and building materials. This is one reason why they pre-sell more than fifty percent of the units.
Once these houses are completed, developers place huge prices on the houses to cover purchase cost and maximize profit.
Employment and Income
As of 2020, Toronto witnessed over 29,000 new jobs in the tech industry; that figure is more than what was created in Seattle, San Francisco, and Washington added together. The increasing job opportunities and the high income lures more people to the city, driving housing demand and prices upwards.
The booming tech industry is also making offices and commercial spaces available less, as more brands intend to open branches. Because of this, smaller businesses are forced to pay through their noses for a commercial space. Worse of all, there are a few commercial buildings under construction.
Housing Target of the Government
The government generates lots of revenues in the form of income taxes from the housing market in the city. This is why the government makes cautious and calculated changes that will not dwindle the revenue generated from the housing market.
Historically, Toronto has been a city for housing investment. One reason for this is because the Toronto real estate market is one of the few markets in North America where you can get a positive cash flow with only 20% down . Over twenty years, the median condo price in Downtown Toronto has risen from $165,000 to about $550,500 in 2017 – a whopping 247% increase.
Is Toronto in a housing bubble?
Yes, Toronto is in a housing bubble, and our team of experts expects house prices to continue to rise steadily in the next few years.
Is Canada housing market in a bubble?
The Canadian housing market is in a massive bubble, considering that prices in cities like Vancouver and Toronto and the number of sales have skyrocketed by almost 76%.
Is the condo market slowing down in Toronto?
The condo market isn’t slowing down in Toronto, although prices may rapidly skyrocket from the last quarter of the year, especially with the ease of travel restrictions.
While many people will argue that the Toronto housing and condo bubble appears so because of speculations surrounding the market and specific factors, there’s no denying that investing in the real estate market is worthwhile. House and condo prices are going up, and predictions suggest that it will remain so for a couple of years, meaning that the housing market can’t crash now.
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