June 29, 2017 | Toronto Future
Real estate in Toronto has rapidly transformed our city in the past ten years. Price appreciation, rejuvenation of many Toronto neighbourhoods like the Junction, Leslieville, Corktown, Liberty Village, and Wychwood Park, and increased densification on a scale that few saw coming. It has been a lot to take in. Some are thrilled to see Toronto become the world class city of its dreams, others are horrified by its lack of affordability. As we adjust to our new reality, we shouldn’t think that big change is over. We should also be contemplating changes that will be coming in the next 10 years.
Here are what I think will be the top 5 issues effecting Toronto real estate in the next 10 years:
- POLITICAL POLARIZATION Many of us in Canada like to think that we are more immune to the polarizing events like Brexit and the election of Donald Trump. In fact, in many ways, Toronto was the original fly-in-the-ointment when Rob Ford held great sway over his very forgiving base. Some would like to believe that Ford Nation is gone forever, but recent polls put current mayor, John Tory, neck and neck with Doug Ford, Rob Ford’s last minute brotherly replacement during the last election. If we do see a more populist mayor again, we may experience another government that may not function in the best interests of making Toronto better. On the other side of the coin, Canada appears to be much more stable and less prone to polarizing figures than other Western countries. The continued political polarization elsewhere could prove to be Canada’s gain. We will appeal to more immigration talent as a more stable country. In turn, this will create more jobs, stronger industries for Toronto and further financial investment, including real estate.
- OUR BIG NEIGHBOUR IS STILL VERY BIG Although we would like to ignore them sometimes, we cannot deny the effect the U.S. has. They have substantial influence over our economy. Out of 50 states in the United States, only two exceed 10% of their annual economic output in their trade with Canada. That’s Vermont and Michigan, if you were curious. Ontario, on the other hand, has a number of 49% according to Trevor Trobe, a University of Calgary economist. Now this could go in one of two directions, I would imagine. First, if the current Trump administration, or one like it, becomes increasingly protectionist, this could be tough on the Ontario economy. We could have a border tax or a trade war. And though we may be able to mildly bruise the Americans, we would end up with a broken nose. In other words, Ontario, or even Canada as a whole, would have much more to lose than the United States. On the other hand, according to Kevin Thorpe, the chief economist at Cushman & Wakefield, The United States is expected to have “the longest economic expansion since World War II”. So, if protectionism in the United States does not take hold, then the Ontario economy will benefit from the products they sell to a growing U.S. economy. Of course, this may mean that we may see more Americans coming to Toronto to purchase, despite the foreign tax recently put into place.
- TECH BOOM PART DEUX The Toronto-Waterloo corridor is seeing incredible growth in the tech sector. What does that mean? Well, if Toronto becomes like other tech cities, real estate may increase as tech hot spots tend to generate a lot of wealth and more pricey real estate. There are other big things that could happen as well when technology is involved. In ten years, we may be on track to have driverless cars which will radically shift the functionality of the city. There will be no parking spots required for your condo or house or outside the bakery you love, if all you have to do is order up a car on your phone. Autonomous cars may shift traffic patterns. Automation may also put many people out of work. It could add to a higher unemployment rate down the road if new jobs cannot be created to fill the job loses. Hopefully in ten years AI will not have made us slaves just yet…
- GENERATION SHIFT Over the next ten years, Boomers will step down from the thrown as the most powerful demographic. They will still be calling the shots in many realms, but Millennials will become increasingly powerful, bending public policy, culture and real estate in their direction. They won’t be the demographic that everyone thinks is too entitled or that has been screwed in real estate. They will be calling the shots. Toronto will still be an very in-demand city for them, but we will see the continued rise of second mid-sized cities like Hamilton that are more affordable, but function more as a city than as a suburb. They will still be coming back to Toronto, though, as the Boomers finally sell their homes and hopeful free up a little real estate for the Millennials.
- INFRASTRUCTURE INVESTMENT I imagine many transit plans will still be in the works or fussed over by the government, but optimistically, we may see some high speed rail to move people in and out of the city faster. London, Ontario may function more like a Toronto commuter town if the ride is 75 minutes to Toronto on a fast train. I don’t think we’ll be anywhere close to having amazing infrastructure, but the demand for it will grow, and it will slowly become more important to the Toronto area if the city wants to stay competitive with the rest of the world. Like always, any area of the city, whether it is a new relief subway line in the east or a speed train to London, where transit is built will experience a larger than average growth in real estate around the stations and along these newer routes. Finally, I think we’ll see more densification in Scarborough and Etobicoke where there is more room than Toronto to build condos. Condos will likely be better suited for families and there will be a better selection of 2 bedroom units.
I’m sure there will be changes that very few could have anticipated. There will also be a few things that don’t change. Toronto will still be an great place to live and work. Real estate will remain strong over the long term. Still, it is always a good idea to have a sense of what may be coming so that you can prepare the best plan that works for you.