Why is Toronto so Expensive to Live in?

Why is Toronto so Expensive to Live in?

The real estate market in Toronto has experienced many ups and downs prior to this era of excitement. The market underwent a specific spike in 2017 that left the buyers scrambling due to the influx of over-priced properties.

Since then, the Toronto real estate market has only gone higher while keeping the bubble of the boom intact. Considered one of the most celebrated ranges of real estate options, the Toronto real estate market often comes under the radar of speculators about why the city is so endearingly expensive.

A Look Back On 2017 And Its Impact On 2020 And Beyond

2017 was a year only a few residents of Toronto can forget. It was an era of an absolute uproar in the city’s real estate market that had left everyone beating their foreheads due to the lack of clarity about the next steps. The severe boost in the prices of residential properties had pushed many home-buyers away from the direction.

A new record was logged for the thirty-three percent increase in the costs of detached residential units.

The most anticipated locations downtown were soaring above $1.5 million and beyond. The astronomical pricing continued to keep the demand higher and reduced the number of listings down to none. As the land for development continued to deplete in Toronto’s different areas mentioned on paper, the investors found a new window to maneuver.

By 2020, the prices were still high, but COVID-19 had driven them down somewhat.

What Drives the Rates of Property in Toronto?

Essentially, a low-interest rate is an ideal choice for retail consumers, but how does it affect real estate?

It added fuel to the raging fires of property prices in the city. Since the big five banks have already lowered mortgage rates, people are enjoying the liberty of consumption and jumping headfirst in the direction of over-priced properties.

Real estate investments have also increased recently in Toronto and urban locations in the country. This is because of the limited number of rental properties available at any given time. People are buying old properties, renovating them, and then putting them up for rental income.

Almost half of the condominiums in Toronto are used as rental properties. This ideology of investments has created a challenge for the ordinary citizen who experiences a backlash when the rental inventory increases and reduces the chances for purchase in the financially constrained segment of the population.

The Lessons from 2020

When we speak of 2020, no one can resist the thoughts of the tragedy that has struck the entire planet in the form of COVID-19. But believe it or not, the pandemic has not completely deteriorated the market trends for Toronto’s real estate.

People often wonder why Toronto is so expensive, but they fail to notice that the city is the hub for all economic operations in the country. With a growing IT industry in the heart of the city, it is evident that the detached residential units are gradually falling down in number. But does that mean you cannot move into a better house?

Certainly Not!

The previous year’s continuous growth supported the hike in property prices in the Toronto area. But as the low-rise market entered the new year, it experienced a sudden drop due to the changes to the citizens’ mortgage stress test and buying power.

This meant higher demand and lower supply, hence reiterating the additions to the average selling price of residential units in the city. The steady population growth due to various factors, including lower rates of unemployment and accessible borrowing costs. These factors have collectively made significant contributions to the property’s pricing in Toronto.

The Way Forward:

Considering the rising prices as the focal point, one must look at the bigger picture. Moving to Toronto is a dream for many, but the lack of reasonably-priced homes often leaves the buyer with two options.

You can either move to the suburbs of Toronto to have a house that fits your budget or leave the idea of purchasing a home in Toronto altogether for the time being.

The suburbs of the city have better housing projects that fit modest budgets like a glove. You can live in the surrounding area and save more for your retirement plans immediately. This way, instead of chasing the clocks until five at work, you can even take early retirement and enjoy living in the moment.

One can easily understand the appeal for the city from this resource curated by Paradise Developments. Not only will you find the city to be aesthetically pleasing, but you also find the charms of better employment, inclusion, and accountability in the region.

Beware of A Few Things

In case you have chosen to go the rental route in Toronto instead of finding a home in the suburbs, you must beware of the factors that impact the high rental rates in the area.

Firstly, the city houses the hub of high-end real estate investments from abroad.

Foreign investors see a magnificent opportunity in the Toronto market and pay a hefty price for the ownership of Toronto based residential units. The efficient transport system in the city and access to a broader round of amenities, make the city an ideal location for investment.

Final Thoughts

Toronto is a dream to live in, but you come across your biggest nightmares when it comes to buying a property in the city. The rising prices and the shortfall of detached housing units have led to the establishment of dystopia in the Toronto real estate market in 2021, and it is showing no signs of stoppage.

The only thing one can do in such cases is to find an appropriate alternative to stay ahead of their financial goals! Let’s hopeS that we all do.