The coronavirus pandemic has changed Canadian industries across the board and Toronto’s real estate industry is no exception. Though the market is poised to emerge stronger than ever, there’s been a perceivable shift as to where demand is growing.
The recovery of the GTA’s real estate market and a rising demand for housing
According to information released by the Toronto Regional Real Estate Board released in July 2020, realtors in the Greater Toronto Area reported 8,701 sales in June 2020. That number is only down by 1.4 percent compared to June of last year. In other words, in spite of the fact that we’re still in the midst of the pandemic, the GTA’s real estate market has nearly rebounded. The TREB also cites that notable year-over-year growth has been observed in detached homes and townhouse market segments in the regions surrounding the City of Toronto.
In an interview with CP24, Royal LePage CEO Phil Soper said online viewership of Ontario listings in regions outside of Toronto are on the rise. According to data via Royal LePage, regions such as Vaughan, Peterborough, Lindsay, Kitchener, and Cambridge have all seen a substantial jump in listings viewership. In reports released in July 2020, Royal LePage also revealed that there’s strong demand from locals and buyers relocating from the GTA in the Niagara/St. Catharines region and Hamilton, with home and condominium prices surging as buyers return to the market. This is all fueled by retiring baby boomers, millennials, and would-be urban dwellers moving out of the city. According to Soper, this desire to move out of the city is something of a trend.
“Silicon Valley North” and the pre-pandemic market
For the sake of context, it’s important to understand the drivers of the GTA’s housing market prior to COVID-19. In the five or so years leading up to the pandemic, bourgeoning tech innovation in Ontario’s capital city earned it repute as Silicon Valley North. Toronto’s tech hub status was driven by early investments in artificial intelligence, government funding, an immigration policy that was friendly to tech talent, and investments by tech giants, such as Uber, Amazon, Accenture, Netflix, Google, and Salesforce. According to a CBRE Group study, released in July 2018, Toronto was the fastest-growing market for technology jobs in 2017, attracting 82,100 tech jobs between 2012 and 2017, boasting a growth of nearly 52 percent.
This kind of steady job creation in the tech industry attracted strong talent from surrounding regions and cities and highly-skilled immigrants of the economic class, many of whom chose to settle within the city itself, driving up housing prices, contributing to record low vacancy rates, and generally driving real estate growth in Toronto. More specifically, the Toronto Real Estate Board cited tight market conditions in the condominium apartment segment and higher-density low-rise segments in data released in May 2019.
For would-be urban dwellers, COVID-19 has changed the demand for housing, location, and lifestyle
When the global pandemic rendered Canadians home-bound in March of this year, urban dwellers were forced to face the fallbacks of city living, ranging from high cost of living to lack of space to inaccessibility to parking. Given the new knowledge that many Canadians can and will work from home, much of the appeal of city living is decidedly less so. As such, more people are shopping for homes outside the city, where they are afforded better value, more space, and a more desirable lifestyle.
Given the rate of its recovery, the GTA’s housing market will be an important driver of overall economic recovery this year and well into 2021. That said, certain market segments—such as the multifamily segment in the regions surrounding Toronto—will be stronger than others, challenging what has been a status quo in years past. Though it’s tough to say when and how the economy will fully rebound from the coronavirus pandemic, real estate in greater golden horseshoe regions such as Niagara and St. Catharines, Kitchener and Waterloo, Cambridge, and Hamilton are already registering strong growth, boding well for the strength of the market on the whole.