Investing in real estate comes with its fair share of advantages. In addition to offering predictable and sustainable cash flow, real estate tends to appreciate in value, keep up with inflation, and provide a higher return on investment, compared to investing in stocks, bonds, or mutual funds. That said, when it comes to investing in real estate, not all opportunities are created equal.
Where you invest is just as important as what you invest in; below, we answer the question of where to purchase property in Ontario, Canada.
Thanks to a series of strong fundamentals, Toronto has long since been known as one of the top cities to invest in in Ontario. Though Toronto is currently facing a housing supply shortage, factors such as high immigration rates, attractive opportunities for academia, steady job creation, and multi-generational wealth distribution bode well for the strength of Toronto’s real estate market. Moreover, in spite of a lull in the real estate market amidst the coronavirus pandemic, Toronto home sales rebounded in June, with the average selling price up 12 percent over the past year. Though Toronto is the priciest place to invest in Ontario, demand in segments such as multifamily housing and rentals continue to rise, rendering real estate investments in Ontario’s capital city a sound choice.
Hamilton is an attractive city to own property in for a few key reasons. In 2019, rental rates increased 24 percent in Hamilton—the highest in all of Canada. This has a lot to do with Hamilton’s proximity to the GTA. As families are priced out of the Toronto market, they turn to the surrounding municipalities, rendering multifamily accommodations in Hamilton’s east and west ends in high demand. Hamilton is also home to prominent post-secondary education institutions, such as McMaster University and Mohawk College. In addition to being an attractive city for post-secondary students in need of long-term rentals, Hamilton boasted a healthy vacancy rate of 3.9 percent in 2019 according to information via the Canada Mortgage and Housing Corporation. Hamilton’s real estate market is also driven by high rates of immigration, thanks to a move by the Hamilton city council in 2014, wherein they declared the city a sanctuary for immigrants. Finally, according to information released via the Realtors Association of Hamilton-Burlington in March, residential property sales are up 25.5 percent from the previous year, with the average selling price for homes sitting at $646,667. This figure has jumped 15.5 percent since 2019.
Niagara is one of Canada’s largest tourist hubs, teeming with wineries and home to the famed Niagara Falls. That said, an increasing number of permanent dwellers, including first-time buyers and newcomer families looking to own their first home, are flocking to the region in recent years thanks to the affordable cost of living. According to information compiled by Maclean’s, Niagara-on-the-Lake was ranked the second-best community for new Canadians in 2019. Vacancy rates in the region are also low, sitting at 2.1 percent in 2019, according to the Canada Mortgage and Housing Corporation. This low vacancy rate is just one indicator of a significant rental shortage in the region, particularly in the multifamily segment. Finally, the average selling price for homes in Niagara in April 2020 was $452,300. That’s up 11.7 percent compared to April 2019, according to a recent market report.
According to a report compiled by the Bank of Montreal, which ranked Canada’s best cities for jobs and affordable homes, Kitchener-Waterloo ranked fourth. This has a lot to do with the fact that the city is home to prominent post-secondary education institutions, and is experiencing significant growth in the arenas of tech, health care, and public infrastructure. Moreover, according to a report released by the Canada Mortgage and Housing Corporation, approximately one in ten homes sold in the Waterloo region are either flipped for profit or leased out, with the most short-term sale and investment activity observed in Kitchener. This kind of investment activity says a lot about the strength and efficacy of the Kitchener-Waterloo’s real estate market.
Windsor is known for affordable housing prices and a strong rental market. Speaking to the latter, the vacancy rate in Windsor dropped from 13.9 percent in 2008 to 2.6 percent in 2019, according to information compiled by Statistics Canada. In recent years, the city has seen major growth—in part, due to large infrastructure projects. This extends to include the construction of the Gordie Howe International Bridge, which will connect Windsor to Detroit. According to information compiled by MoneySense magazine, Windsor was the top Canadian city to buy real estate in 2019. The same source lists Windsor’s average price of a home at $313,000 and its five-year annual return on investment at 11 percent. As families are priced out of the GTA, multifamily offerings in Windsor pose a cost-effective alternative for those looking to rent or own.
The vacancy rate in London has been steadily dropping since 2009. As of 2019, it sat at a record low of 1.7 percent, according to information compiled by Statistics Canada. This has a lot to do with the fact that London home to Western University and Fanshawe College—posing attractive opportunities for academia—and several hospitals—posing attractive opportunities for long-term, stable employment. The cost of living in London is also lower compared to other Southern Ontario cities, which makes it a feasible alternative to living in Toronto, particularly for families and first-time buyers. In London, the demand for affordable rentals is high, particularly in the multifamily segment, as homeownership costs continue to rise across the board.
Greater Sudbury touts one of the most affordable real estate markets in all of Canada. Thanks to factors such as increased livability, expanding job diversity, and an affordable cost of living, Sudbury has become a prime spot to settle for students, families, and newcomers to Canada. Sudbury also has a low vacancy rate of 2.1 percent, which translates into 21 out of 1,000 apartments being available to rent. A low rate of vacancy means increased demand, increased rental prices, many prospective tenants, and a healthy return on investment as a landlord. This bodes well for those looking to invest in Sudbury’s fast-growing real estate market and expand supply in the multifamily segment, where the demand is quite high.