Inbound migration to the Greater Toronto Area should allay fears real estate investors may have about how profitable the region’s housing stock is.
“We used to take 200,000 to 250,000 new immigrants, and 100,000 would come to the GTA,” said Cameron Forbes, general manager and broker of REMAX Realtron Realty. “Immigration has increased to 350,000, so now about 140,000 people are settling in the GTA every year. If you think about two to three people per household, that’s 30,000 to 40,000 new units of additional housing each year, and that’s what’s being constructed now. Fifteen thousand ground-oriented homes, including detached, semi-detached and townhouses, and about 20-25,000 new condos each year.”
That means ground-related housing should yield investors high returns because they’re scarce to begin, but also because the province’s intensification mandate favours developing condo units over freehold housing.
“You can’t recreate the land, so there will be a higher average price increase for detached homes. There will be a good return,” continued Forbes. “It’s just a matter of affordability. They’re at a price point where not a lot of people can afford to buy them anymore in the 416, but it would be a great investment because they’ll go up in price for the foreseeable future and into the long-term.”
According to Canadian Real Estate Association statistics released for the month of August, unit sales are up 8.5% this year over August 2017, and the average selling price of $765,270 is also a 4.7% boost over last year.
Forbes indicated that CREA’s stats are in line with REMAX’s forecasts, which show a balanced market in which buyers can take their time deciding whether or not to tender offers, and also one in which sellers aren’t buckling under the weight of multiple offers.
“The stats coming out on a monthly basis were slow until May, and that’s the result of the foreign buyer speculation tax,” he said. “We’re seeing that the market is good, but it’s been slower than the fast pace we’ve become accustomed to for the last five, 10 years. In those areas that have shown the greatest weakness—the outer parts of the 905—we’re seeing renewed buyer confidence and renewed sales and price increases in the areas that had seen the greatest slowdown.”
According to Cam Woolfrey, a sales representative with Royal LePage Signature, multiple offers are still commonplace in downtown Toronto.
“Anything in close proximity to the core or major transit are getting multiple offers and selling well above asking, and that’s where most of the interest is,” said Woolfrey. “From an investment standpoint, there’s strong interest to hold those going forward.”
As for what could fetch the highest return, Woolfrey notes that, in Toronto, condos and townhomes are the fastest appreciating asset class of real estate, although freehold remains the surest bet.
“Given the demand and necessity for units in Toronto, they’re not building too many homes that are semi-detached with any access to the core. When you buy something with quality, it should be a solid investment,” said Woolfrey.
“You’re able to predict development of at least five years out. Leslieville and High Park won’t be rezoned for high-rise anytime soon. I’d look at those assets as especially sought-after when price point starts making more sense.”
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