Is Toronto Real Estate Still a Good Investment?
Even in these uncertain times, Toronto has one of the most sought-after real estate markets in the world. In a relatively short period of time, Toronto grew from a modest Canadian city into a metropolis and top ten global financial center. As demand to live and work in Toronto has grown, so have local real estate prices, which increased by over 300% from 2012 to 2022.
Despite a pullback in prices over the course of 2022 driven by higher interest rates, Toronto real estate still seems still pricey in comparison to many other North American cities. We aim to answer some of the most commonly asked questions about Toronto real estate and uncover the hype behind the prices.
Is Toronto Real Estate Still a Good Investment?
Yes, Toronto is one of the best markets in the world to buy real estate. Buyers can rest assured that property values will continue to remain strong and grow due to a multitude of factors that make Toronto a global super city. Toronto has a booming population and sees an inflow of over 100,000 immigrants annually who are attracted to the world's hub of cultural diversity where over 180 languages are spoken and over 50% of the residents are foreign-born. Toronto's is Canada's financial hub, responsible for more than 20% of Canada's economic output and is the second largest financial center in North America after New York, meaning employment and business opportunities are plentiful. Investors continue to be attracted to Toronto because of the stability of the Canadian political and banking systems and close proximity to the United States. Despite its status as a global metropolis, Toronto is considered one of the greenest cities in the world, full of lush green forests and surrounded by the Oak Ridges Moraine which is a belt of protected conservation land.
The Toronto Economic Dashboard offers a high-level view of the city’s diverse and robust economy through financial metrics.
Is it a good time to buy a house in Toronto in 2023?
2023 presents an excellent opportunity to invest in Toronto real estate while prices are temporarily discounted. The great Warren Buffett’s adage “buy when there’s blood in the streets” doesn’t just apply to the stock market. The Bank of Canada’s interest rate hiking spree aiming to cool runaway inflation has driven a significant increase in housing inventory as homeowners experiencing FOMO rush to get their properties on the market to cash in on historically high home prices. This surge in listings has created a buyer’s market even in Canada’s hottest cities including Toronto, giving buyers the power to negotiate favorable terms and for the first time in years, lower prices. This period of opportunity for buyers may be short lived as many experts anticipate that interest rates will begin to fall again once the Bank of Canada feels assured that inflation is under control (perhaps late 2023 to early 2024). Falling interest rates is often shortly followed by renewed consumer confidence which will jump start the demand for Toronto real estate. Toronto’s robust economy, diversity and culture have made the city a globally renowned metropolis that will continue to grow in the long term and today’s relatively low prices gives prospective buyers a chance to “buy the dip” before the rocket ship takes off again.
When Will the Toronto Real Estate Market Crash?
Despite the noisy naysayers and apocalyptic chatter of the media, Toronto real estate is not going to crash anytime soon. Although the Bank of Canada’s interest rate hikes have certainly had a cooling effect on the market, the +100k new immigrants who call Toronto home each year need a place to live and this drives continually growing demand for real estate in the city. Despite the rapid growth in the number of listings since the rate hikes began, supply is still not sufficient to keep up with demand. RBC expects real estate prices to drop about 12% from their February 2022 peak by early 2023 which isn’t much of a decline when you consider that the average price of a home in Toronto increased by 40% over the course of the pandemic - one can hardly call that a crash. In any case, unless you’re in the business of house flipping or speculating it’s not worth your time worrying about short term volatility in the market - stay the course and in due time your property will appreciate in value.
Is real estate in Toronto overpriced?
There is no doubt Toronto is a very expensive city to live in and as of 2022 surpassed Vancouver as the most expensive city to buy real estate in Canada. Although the upfront cost of buying a home in Toronto is very high, Toronto real estate is not overpriced. When compared with other global cities, Toronto is relatively affordable. Despite rapidly rising real estate prices in Toronto, housing in Toronto is still about 40% less expensive than New York on average.
Visit our home page for more awesome articles on the Toronto/GTA real estate market.
