A housing boom in the Greater Toronto Area (GTA) has led to a steady increase in resale value over the past decade, but has also made the area’s housing less affordable, says a TD Economics special report released on Monday.
The executive summary on the GTA’s housing market is a 20-page report prepared by TD’s Deputy Chief Economist Vice President Derek Burleton and Economist Diana Petramala. The report covers how the housing boom is masking the growing structural challenges of Toronto’s economy.
With the influx of immigrants coupled with Canadians constantly moving into the GTA, the demand for housing in Toronto has increased, the report says. This increase in demand has resulted in a rising cost of housing in the GTA over the years.
This housing boom has resulted in many residents being unable to afford a home and leaves Torontonians very few options to find affordable housing. The report has also references the lack-luster public transit in Toronto.
On a brighter note, however, the housing boom has created an estimated 25 per cent of GTA jobs over the past 10 years.
Michael Chow, a Toronto real estate agent, believes that one of the important underlying reasons for the housing boom is the international home buyers, who play a big part in Toronto’s housing market.
“The international students from schools like University of Toronto and Ryerson are buying condos to live in. For some of them — a small percentage — they buy these condos for investment purposes,” said Chow.
According to the TD report, 40 per cent of new homes built in the late 1990’s were condos. This percentage doubled by 2014, with half of the new condos being built in downtown Toronto.
“The people moving to downtown are mainly young people, and not like the older generation and baby boomers like myself,” Chow said. “Young people tend to buy things that they can afford and condos tend to be in their reach.”
Chow still has a positive perspective on Toronto’s housing market for the future. He believes the market is sustainable because Toronto’s society is attractive for immigrants.