In this week’s blog post, Tembo will outline stories which highlight the big accelerating trends in Canadian real estate: falling momentum in the condo market, the ‘back to the land’ trend, and the continued strength of Montreal’s real estate market.
While condo rents are beginning to fall in Toronto due to weakening demand and a move to place condo units (both newly built and older stock onto the market quickly to soak up tenants), the overall cost of finding a decent unit is still high. Zoocasa recently released an analysis of rent vs ownership for condos, the findings were that in only two pockets of the city East York and Rouge Hill (southeast Scarborough), did the cost of buying a condo make long term sense. Zoocasa’s analysis finds that if the cost of a condo exceeds 15 years of rent, it’s smarter to rent than to buy. Anything that costs 1-15 years of rent is a no brainer to scoop up, and again, that was only the case in East York and south east Scarborough. Areas in Toronto with the most expensive condos (portlands, beaches, midtown, and the Annex, cost on average over 31 years of rent. So while the excitement and frenzy over buying a condo is beginning to wane, rents are still very high by any measure.
A Toronto couple with two kids (successful middle aged professionals) were featured in a Toronto Life article. They spent $750,000 buying a two storey four bedroom farmhouse close to Beaver Valley Ski Club in Markdale, a town just south west of Collingwood. Both had been in the real estate market beforehand, and had bought a small very older built house at Dundas and Pape that they bought for half a million dollars at the height of the 2008 crisis – the perfect and opportune time to buy. The house sold significantly under asking. The couple eventually fell in the love with the tranquility and peace of rural Ontario (as did their young children), and decided to live in a rural community. They bought the farmhouse not long ago, the husband commutes to Toronto and stays in their Leslieville house (they kept it) and the wife works from home. The children are ‘thriving’ in the countryside. This is a story that will repeat itself in the coming years.
Montreal’s booming real estate sector caught the eye of Tembo months ago, but the momentum keeps building in strength for Quebec’s largest city. Townhouses in Montreal’s downtown core sell for 20% less per square foot than their counterparts in downtown Toronto. The city is vast, and has long had a reputation for extremely cheap rents given its size and job opportunities. High rise and condo construction in the city is accelerating, and the effects of COVID-19 are starting to wear off. The Quebec government arguably employed the most loose and relaxed lock down policies of any province in Canada. Montreal is not just a logistics hub and major port, it is also home to a thriving financial sector (most futures in Canada are marketed, created, and sold here). Montreal’s innovativeness in the financial space is internationally renowned. The city also has a strong service sector, government offices, and a fair bit of manufacturing (oil refining). Prices in Montreal are rising quickly, so take advantage while the city is still affordable (relatively).