Trish Bongard Godfrey

Where To Buy in Toronto Now - 2014

06 October 2014
Trish Bongard Godfrey

There is not much serious talk about the Toronto real estate market collapsing. A contrary-minded person would likely say that when everyone is bullish, it is the top of the market...any market. But evidence shows that this is not the top of the market, simply - really simply - because there are still more buyers who want to make Toronto their home than there are affordable properties available. Even an earth-shattering global event isn't likely to drive everyone away: on the contrary, Toronto looks like a perfect place to live.

Buying a home is getting to be a very difficult prospect for the next generation. Many people are thinking about how they can assist their children now for the future. Already, the average home in Central Toronto is almost $1.5 million. Here is a look at TREB prices as of the end of August 2014:


Detached: $1,439,981

Semi Detached $853,014

Attached/Row/Town: $843,955


Detached: $736,883

Semi Detached $555,917

Attached/Row/Town: $523,863


Detached: $ 631,357

Semi Detached $607,157

Attached/Row/Town: $523,863

I will lay out the case for why you should consider investing in more real estate, areas where you would not normally think about.


A report from Statistics Canada was released in September which predicts huge population growth in Canada. "In the medium-growth scenario, the Canadian population would grow from 35.2 million people in 2013 to 51.0 million people by 2063."

I'm guessing they aren't all headed here to be farmers in rural areas. They're coming to the cities, and they are coming to Toronto. Already, almost half of this city's population was born outside Canada. StatsCan also predicts the growth in Ontario will be from 14.8 million to 18.3 million people – almost 25% more people. This alone should be comforting to those who think that they want a good market to sell into in the next 20 or 30 years. But it is sobering for people who think they want to buy property in the next 10, 20, or 30 years.


What's left to buy when the average price of a detached home in Central Toronto is almost $1.5 million?

These days, it is not unusual for buyers to be young, well educated, and have very little down payment (that great education has put them in debt already). The bank likes them because they have great jobs and good cash flow, but they have had a hard time saving up 20% for a big down payment. Prices are going up faster than they can put away money, and they look for houses under $1,000,000 so they can get a CMHC insured mortgage, for which they only need 5% down but have to pay an additional premium. Remember, these insured mortgages are ONLY available on houses UP TO ONE MILLION DOLLARS. So there is a huge ground war to find decent properties under $1,000,000 in Toronto.

Let's get back to the million dollar question. These three charts I created show the number of (potentially) insurable house sales which sold in Central, East, and West (the three main areas of the Toronto Real Estate Board we work in) for under $1 million in the past four years. (I say ‘potentially’, because houses that require a lot of renovations often do not qualify for insured mortgages anyway.)

Take a look at the first chart. The number of listed properties in the Central core that sold under $1 million in 2011 was over 4,000. So far this year - which in real estate terms is almost over because many houses sold now will close in 2015, and won't be on these stats - there have been just over half that number. The available inventory for first time (5% down) or highly leveraged buyers is shrinking very quickly


Look to the St. Clair street car and the new Eglinton Crosstown line (which has the politically predicable advantage of already being under construction). There are lots of new, great restaurants along St. Clair, and once the Eglinton Crosstown construction is over, I predict lots of new residential and commercial improvements. As prices increase, affluent families will move in and the level of services, schools, and amenities is bound to improve too.


So, what am I suggesting? Buy decent houses with good-size lots in selected areas to the west you might not normally want to live in.  Rent and hold, or improve and sell. Wait for the new transportation lines to bring new buyers. Over the next few years, I think these areas will increase in value at a very acceptable rate. If you want to buy property for your children, a tax adviser should advise about how to minimize the tax impact to your family. Call me to find out what properties would be good investments for your children.