While the winter of 2015-2016 may have gotten off to a weak start in Toronto with unseasonably mild weather, the same cannot be said of the City’s real estate market, which remains strong. According to Toronto Real Estate Board President Mark McClean, “It is clear that the handoff from 2015 to 2016 was a strong one. This is not surprising given that recent polling conducted for TREB by Ipsos suggested 12% of GTA households were seriously considering the purchase of a home in 2016. Buying intentions are strong for this year as households continue to see home ownership as an affordable long-term investment.”
No matter how you break it down, 12 percent is an impressive number that deserves examination. From a statistical point of view, there are a number of key demographic factors that continue to fuel Toronto’s robust real estate market.
Steady Population Growth – Census figures tell us that Toronto’s population grew 9.6% during the years 1996 through 2011 and the number of households in the GTA grew by 16%. At some point in the next twenty years, the City’s population is expected to exceed three million. This steady population surge is one of the factors responsible for the explosion of new skyscrapers and condominium buildings in the Toronto sky, along with new townhouse developments and infill housing in the City’s established neighbourhoods.
Baby Boomer Households – During the same period (1996 – 2011), the largest growth spurt in the number of households by age was in the 45-64 age group. Buyers in this group are showing a strong preference for downtown urban living. They are not only looking to downsize from large suburban homes, but to refashion their lifestyle completely. Instead of lawns and garages, they want gyms in their building and access to public transportation. Rather than a large backyard and four bedrooms, they are opting for loft-style living near cafes and restaurants. In many respects, they want exactly what their millennial generation children want and many of them have the cash to spend.
What will the Millennials Do? - For the past decade, the millennial generation has contributed to the condo boom through their willingness to rent expensive one bedroom condos in Toronto’s downtown centres. Now, as many members of this generation start to have families of their own, it remains to be seen whether they will become buyers or continue to embrace the flexibility of the renter’s lifestyle. Two things are certain – 1) this is a generation very attached to urban locales and 2) based on their numbers alone (there are 1.5 million of them in the GTA region), they are a force to be reckoned with.
Any understanding of real estate market strength and movement in Toronto must take into account the major demographic trends and shifts at work. As the City continues to attract new residents, the housing industry must continue to focus on creative housing solutions to meet the demands of a growing population.