Why are central Toronto condo prices rising so fast?

Why are central Toronto condo prices rising so fast? It’s a complicated issue but here is a summary of reasons:

Rising immigration year to year. Currently the federal government is raising its targets by 3-6% per year; 310,000 (2018), 330,000 (2019), 340,000 (2020). In the previous decade the average was 260,000. 35% of these new immigrants end up in the GTA
Economic growth in Canada is now approaching 3% (GDP)
The unemployment rate is 5.7%, the lowest it has been in 40 years.
Inflation is less than 2%
Interest rates are still very low historically
Provincial and Municipal governments have meddled in the condo economy to a huge extent, contributing to a shut off of new inventory.
Historically low inventory of condos available to buy or rent
New rent controls that discourage the development of all rental housing including condos.
Toronto is now a world city with many international buyers and visitors eager to experience the exciting city it has become.

For all of these reasons plus a few more, it seems unlikely that prices for condos will see much relief. Bubble talk is just talk. I have heard it every year since 1998 when Toronto’s great rebuild kicked into overdrive.

Toronto Real Estate Inventory Statistics

A stat I watch weekly is resale condo inventory for the city of Toronto (Eglinton, DVP, Dufferin, Lake Ontario). This covers what I largely consider “downtown”.

Below is the history of early January inventory for the past 8 years.

This stat tends to predict what prices will do over the year. 713 units is a tiny supply for this region. I think this indicates significantly high prices for 2018. If a huge burst of supply doesn’t come we have some big long-term price issues.

January 27, 2018/by Mahyar Rezapour

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