As Toronto’s real estate market continues to be red-hot, those looking to generate some extra income for retirement may consider buying property in one of the city’s suburbs as a potential investment. As the prices go up in the city centre, it makes sense that the boom will extend to Toronto’s surrounding areas and sure enough, investing in these areas has pros and cons.
Pro: More inventory
While the condo inventory in downtown Toronto has indeed spiked somewhat, with the Building Industry and Land Development Association (BILD) stating that the condo inventory jumped to over 63% in the summer, they warn that the situation won’t last long. Their predictions assume there’s only somewhere in the neighbourhood of five months’ worth of inventory available. Add to that the spiking prices and the fact that homes typically only stay on the market a short time – with bidding wars a reality – more buyers will start looking to the suburbs as an option.
Con: Prices are going down
The price of residential properties located in Toronto’s suburban area dipped during the year’s second quarter – specifically the Richmond Hill, Markham and Vaughan regions. Much of the blame was placed on the federal government’s mortgage stress test, which went into effect in January, reducing potential owners buying power. Thus, a significant increase in value may not be a sure thing.
Pro: Families looking to plant roots
While some young families are opting to stay in the city centre as tenants, many of them still buy so-called recreational properties (cottages) in more rural places like Prince Edward County. Another cohort, particularly those with children, invest in areas that offer a good work/life balance, room to move around and easy access to the city via commute. Single people and couples may prefer the city, but those with families want room to grow.
Con: Toronto’s millennium exodus
One worrying trend is that as prices go up, more and more millennials are opting to relocate to quieter, less expensive areas. Statistics Canada studies show people are leaving places like Toronto in growing numbers, opting to move to cheaper parts of the province, such as Hamilton. The 20 to 34 millennial age group is the demo that seems to be leaving the most, which isn’t a good trend as they’re the ones entering the workforce, starting families and needing to buy homes.
While investing in real estate has its pros and cons, the fact remains that real estate is still one of the less volatile investments. While the market may change, property bought close to Toronto still seems like a good bet, as even though people may be leaving, the population boom is still relatively strong, and those people will need housing.