Canada's Condominium Magazine

Demographics and low inventory put pressure on Toronto’s real estate prices to increase: Toronto’s population to hit 7.1 million by 2019

Despite legislative tinkering with the real estate market, supply and demand remains the main market force in the real estate market. With Toronto’s population projected to increase to 7.1 million by 2019 — and only a 2.3-month inventory available — the demand will remain strong. This is one reason prices have not significantly dropped at a time when it appeared “buyers” were in control of the market after a lurching slow-down in summer. The demographics and demand numbers, however, seem to imply that it will not become a buyers market.

 

Demographics for Canada’s city indicate pressure on prices will continue. In Toronto, the population increases annually by 109,000 (rounded). Demand for housing increases by 35,000 per year, while capacity and inventory of both homes for sale or rent is low.

 

Currently, 80,000 people move into Toronto each year — the population increases 108,766 each year — requiring conservatively 35,000 new homes each year (either for purchase or rent). Currently, we build less than 2,000 rental units in a typical year. Although housing starts are up, there is a large deficit on available housing. Regardless of legislation, this puts pressure on the market prices to rise.

This is one reason prices have not significantly dropped at a time when it appeared “buyers” were in control of the market after a lurching stop in summer. The numbers, however, seem to imply that it will not become a buyers market any time soon. As long as Toronto remains the target destination of businesses and immigrants, the supply will remain low, keeping the pressure on prices. Even if buyers try to “wait out” the sellers, any dips will likely be temporary.

 

Although home building starts are up — and even with major developers such as Tridel building continuously — there remains a shortage of homes. A recent “live” view of Tridel’s Ten York.

 

Other major pressures

The pressures that will likely keep the market up on price (not necessarily on sales) include more than just demographics:

  • an additional 108,766 people in Toronto each year [1]
  • inventory is slightly up due to the summer pause, but far below demand levels: currently 2.3 months in the Greater Horseshoe, down from the long-term average of 3.1 months [2]
  • 66% of Toronto consumers want to buy (either first time or move up/down) within the next 12 months [See full story here>>]
  • pent-up demand from the 42.1% of adult children who still live with their parents in Ontario (56.3% in Toronto) (who need or want to move because of relationships and to start families of their own) [Full story here>>]
  • due to short supply of rental properties, rents are at record highs — pushing people to buy rather than rent

Other pressures on the market include pent-up demand from “stay at home” adults. They don’t “stay at home” because they are filial — they are having the same difficulties as new immigrants: finding a home they can afford. This has led to a shift in preferences to vertical living, shown in the latest 58% increase in home starts for multi-dwellings. [Full story here>>]

 

Builders such as Tridel have many condominium high-rises under construction, which, in future, may help with demand. Photo: Ten York by Tridel.

 

Other demographic pressures

Currently, Toronto’s median age is 39.2, and the average age is 41. One in four Torontonians will be “seniors” by the year 2036. The increase in age will result in new demand for “down-sizing” after the nest empties — assuming the 42.1% of adult children do eventually leave. Other important demographics for urban planners include:

  • 22% of 55 years-and-older Torontonians live alone
  • the number of 55 years-and-older Torontonians increased in all but one Toronto neighborhood in each of the last 10 years
  • 44% of 85 years-and-older live alone.

NOTES

[1] Demographics from Toronto Foundation

[2] Inventory reported in the August sats of CREA.

Via-Bloor-Tridel
Auberge on the Park-Tridel
Bianca-Tridel-Annex

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