Last night, I had the privilege of participating in the 2023 Real Estate Roundtable, an annual event organized by Post City in partnership with the Rotman School of Management. It was a diverse group of experts from various backgrounds including Benjamin Tal, Jennifer Keesmaat, Jay Pitter, Brian Gluckstein, and Brad Lamb, amongst others. 

 

We covered a lot in the 90 minutes. Jennifer and Brad focused on development and urban planning; Jay brought keen insight into the challenges of equality and equity in city building; Ben’s take on inflation was truly informative; and Brian opened our eyes to the importance of good architecture and building infrastructure for families in the downtown core.

 

Naturally, I kept to my lane and lent some perspective around what I’m seeing in the market. To be frank, I’m feeling positive about the Toronto real estate market. In February, more that 36% of homes in the GTA sold for over the list price. Showings of Harvey Kalles Real Estate properties have quintupled since late 2022, returning to the same levels we’d seen in 2017 through 2019. We’ve even seen several examples of buyers competing for available listings. Two of our homes had been on market for a substantial period of time, but the moment an offer was registered, other buyers came off the sidelines and added upwards pressure to the selling price. 

So, as we head into spring and summer, I expect to see an increase in listings, which is typical for this time of year. By no means will it address the supply-side challenges our region is facing, but with more selection available and no anticipated rate hikes in the near-term, we should see an increase in activity with more buyers engaging in the market. 

Despite accounting for a lower share of the sales mix, the luxury market in Toronto also remains strong. A quick review of the MLS Home Price Index, which we use to track changes in property values, shows that the 416 has outperformed the full TRREB region over the past 12 months. And, the C03 district (which includes Forest Hill) and the C12 district (which includes the Bridle Path and St. Andrews) have outperformed the City of Toronto.

None of this should come as a surprise. There is so much immigration to our city, and housing infrastructure isn’t keeping up. I recently met the developer of Aura Condos, which now houses 1800 people; it took him eight years to complete. In February, our sales agents took a tour of Concord Adex’s Park Place community. This is the second largest master-planned community in the city with 20 towers, $100 million in infrastructure, set on 45 acres. It will take well over a decade to complete, and once finished, will house roughly 10,000 people. We have that many people coming to the city every three weeks.   

With the ongoing housing supply challenge, I believe demand for rentals in Toronto will remain strong. I’ve heard some people suggest that we’ll get to $6/square foot for rentals. Already some of the newer, amenity-rich, mid-town releases like 2Fifteen and the Parker are over $5 per square fot, so we may be heading in that direction. 

So, there remain many challenges facing the housing market, but I do want to take a moment to talk about housing as an investment. If you have purchased a home any time over the last 52 years, and stayed in it for more than seven years, you’ve made money. There’s a definition of what a great investment is. It’s ‘an average return over a longer than average period of time.’ That is the definition of housing, although, of course, it’s more than just an investment. People who buy stocks don’t stay in them for many years. 

I think, moving forward, people have to recalibrate their mindset around what housing is. It’s not just an investment, you also get the bonus and benefit of living in your home.