When you drive around the GTA you see cranes in the air everywhere (154 to be exact). Those cranes translate into 46,362 condo units under construction. This can start to make you wonder: is there a condo bubble? Well rest assured there is not, and we actually need those cranes to keep up with demand. Let's take a look at why.

First off, Toronto is a great place to live. In 2014 it was ranked the 4th most livable city in the world by the Economist. Toronto is the Economic engine of Canada, with 162 of the top 500 Corporate Head Offices in Canada taking up residence here. It is ranked the #1 City to invest in long term in the world by Grosvenor, a U.K. based property think tank. It is ranked the safest large metropolitan area in North America by Places Rated Almanac. Toronto is also the most multicultural city in the world; over 47% of the population have a mother tongue in a language other than English or French (Over 140 languages and dialects are spoken). Additionally, 47% of Toronto's population (1,162,635 people) reported themselves as being part of a visible minority group. Finally, Toronto sits on the largest source of surface fresh water in the world; the Great Lakes contain 84% of North Americas surface water supply and 21% of the world's surface water supply (only the polar ice caps contain more fresh water). Currently 780 million people do not have access to clean water and this number will only increase as populations continue to grow and water availability continues to decrease. 

Secondly, Canada is a great place to live and do business. According to KPMG, total business tax costs in Canada are the lowest in the G7, and 46% lower than those in the United States. The World Bank labelled Canada the best place in the G7 nations to start a business, and thanks to an open immigration policy it's comparatively easy to enter the country. For the seventh consecutive year the World Economic Forum has ranked Canada's banking system as the world's soundest; Canada has the largest source of natural resources in the world not in danger of being nationalized. Canada is a free market and welcomes international investment in our natural resources.

All of these indicators lead to a positive number of jobs being created in Toronto, positive number of people immigrating and migrating to Toronto, and a positive amount of capital investment into the city.  The Toronto region will have 519,881 jobs to fill from 2014 to 2019; 2271,721 of these will be newly created jobs and 248,160 will be filling in for people entering into retirement. In addition, these jobs are attractive for people from across Canada, and people from around the world to migrate/immigrate to Toronto. The Greater Toronto Home Builder Association states that over 100,000 people come to the region each year from immigration and migration from other parts of Canada, and people starting familes. Between 2001 and 2006, Canada received 1,109,980 international immigrants. The City of Toronto welcomed approximately one quarter of all immigrants to Canada (267,855), which worked out to be about 55,000 people annually during this period. According to The Ministry of Finance continuously increasing trends in the population will make the GTA the fastest growing region of the province, with its population increasing by 2.8 million (44.6%), reaching almost 9.2 million by 2036. Finally, with the increase in jobs and population, we are seeing an increase in capital being invested in Toronto.

Downtown Toronto is growing four times faster than the rest of the city, and has a quarter of all of the office development in Canada. The GTA in 2014 than almost any other city in the Americas as developers take advantage of low borrowing costs to meet demand from companies such as Google Inc. More than 1.59 million square feet of so-called triple-A space will be added in Toronto next year according to data from Cushman & Wakefield Inc., the world's largest closely held real estate brokerage firm. That's more than in New York and trails only Mexico City. In 2012, investment in office, retail, and industrial properties reached $13 billion, up 73% from 2009 according to RealNet data; approximately one third of that was office space. Total transactions amounted to roughly 2,000 transactions, while the number of sales worth more than $100 million reached a record 14 deals. There are 7 downtown office towers currently under construction, and 50% of all retail space being built nationally is located in Toronto. Projects such as an improved Union Station, along with other public transportation enhancements, are enticing U.S. companies, which are suburban tenants traditionally, to move downtown. As the population increases in the GTA to fill all these new jobs - what will everyone require - a home.  How many homes will we need? According to the development industry, the GTA requires between 35,000 to 40,000 new homes each year to keep up with demand

Now let us look at who is currently living in Condos. Over half of downtown Toronto population is millennials. Millennials are young workers that flock downtown - these are individuals born in the early 80's to late 90's. Toronto has a finite supply of HOUSES. The inventory of low-rise family homes in Toronto in not increasing. (Low-rise is defined as detached, semi-detached, or townhomes). Where will all these young professionals live when they start families? Since there is a finite supply of houses in Toronto there are not enough houses for people living in condos to move into. There is new supply of detached homes being completed in the suburbs of the GTA but this land is also scarce because of the creation of The Greenbelt, which restricts development. The government is focusing on  us developing up and not out. When Millennials debate the choice of living in a condo or moving to the suburbs when starting a family they have to factor in:

• Time incentives - currently they can walk to and from work for a total commute time of 30 minute or less.
• Convenience - currently they can walk out the door and go to the grocery store, pharmacy, restaurants, and coffee shops.
• Affordability - The price gap between a low-rise home and a condo has grown to $251,000 in Toronto. Plus, they can walk so they do not need to have the expense of a car. 

There is another strong statistic that is never included in house statistics; Canada ranks as the world's 7th most popular destination for international students. International student enrollment grew from 159,426 in 2003 to over 290,000 in 2013 - an 84% increase. Nearly 127,000 of these students attend institutions in Ontario, which is 43% of the international student population in Canada. The majority of these students make the GTA home, and attend one of the 8 post-secondary institutions.  Since international students are coming from abroad, and they do not have family to stay with they seek out accommodations close to the universities. With larger budgets for accommodations we see international students either renting or purchasing condominium units close to their university. This puts an increasing pressure on our housing supply, which further justifies the increase in the supply of condo units in Toronto.

The current market situation supports these findings. In 2014 Condo prices increased by 6.4% from 2013 in the GTA, and even higher in Toronto by 7.6%, according to the Toronto Real Estate Board (TREB). The current Toronto vacancy rate is 1.8% and this number is even lower in Downtown Toronto at less than 1%. The number of condo apartments rented through the MLS system in the Greater Toronto Area reached a record high for the second consecutive quarter at 7,132 units, 10% higher than a year ago.

With the current millennial population choosing condos over houses, the population increase of 100,000 people per year coming from across Canada and around the world, the increasing international student population of 100,000 plus in the GTA, and other factors like the downsizing baby boomer population the question becomes: do we have a house shortage instead of a bubble? 

If after reading this you are interested in investing in Toronto Real Estate reply to this email and set up a meeting. This will be your first step toward building generational wealth and retiring early or call 416 996 5181. 

Featured Listing 

BRAND NEW ASSIGNMENT AT SOLD OUT CASA II

UNIT 3303

2 Bedroom 2 Washroom Unit

$635,000

Email: contact@alexjwilson.com or call 416 996 5181 For More Information

Description:

This 2 bedroom 2 washroom unit sits on the 33rd floor and has 763 sq. ft. of interior space and a wrap around balcony that provides 209 sq. ft. of outdoor space. This unit is a corner unit that faces South and West. It will be flooded with natural light because of its floor to ceiling windows and exposure. Situated just south of Yonge and Bloor you are only minutes away from two subway lines as well as luxurious Yorkville.

Occupancy is expected Fall 2016

The sculptural 56-storey glass tower, designed by the acclaimed Peter Clewes of architectsAlliance, will present a dramatic façade in the Yonge/Bloor neighbourhood. Residents will enjoy a wealth of recreational and entertainment amenities, including a magnificent outdoor pool, two luxuriously appointed guest suites, a fully equipped fitness facility with his/hers change rooms, a large outdoor terrace with BBQ, a cozy and comfortable residents lounge and an elegantly designed party room with catering kitchen for stylish entertaining.