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How to Navigate Torontos Housing Market During A Time of Great Uncertainty:

Rising Rates, A Possible Recession & the Ever Resilient Toronto Real Estate Market: A Conversation with Veteran Real Estate Analyst Ben Myers:

In a time where fear and uncertainty grip the market dominated by talks of inflation, interest rates, and a looming recession, where does the Toronto Real Estate market stand today?

We spoke with Ben Myers, the president of Bullpen Research and Consulting, for additional insight, commentary and forecasting. Ben Meyers boasts over two decades of real estate research experience across North America and is a respected voice in the housing market. He has been at the forefront of industry insights, heading up research arms and Executive Vice Chairing top condominium data tracking firms in Toronto; as a recognized figure in the media, Ben has grace platforms such as BNN, CBC, CTV, and quoted by international giants such as the Wall Street Journal and the New York Times. His written perspectives are sought after appearing in esteemed outlets like the Toronto Star, Huffington Post, and Livable and educated at prestigious institutions, including Columbia and MIT. Ben’s in-depth knowledge has guided top developers, members, central banks and international head funds.

Turn Up the Volume with Ben Meyers | Watch the Conversation Unfold:

Inflation to Innovation: Toronto’s Real Estate Rollercoaster:

From the perspective of the “new housing market,” it was busy and booming from April 2020 to March 2022. During COVID, emergency low-interest rates fueled investors and buyers to purchase pre-construction condos. Simultaneously, a lot of new condo projects were completed and entered the marketplace at the same time. There was inflation, as everyone knows; there were issues with getting products to Canada and a shortage of materials. That in turn, drove up construction costs, and because demand was extreme, expenses were going up not only for product but for labour, and development charges for government fees were raised. So we had cost-push inflation as well. A few economists will tell you that it doesn’t exist, but it certainly exists from Ben’s conversations with developers. If their costs go up, they must pass on those to the purchasers as they want to maintain a certain margin to get lending when launching a new condominium project.

So, the scenario drove up the prices of new condominiums. Then, when the Bank of Canada finally decided that inflation was running way too hot, they needed to raise interest rates. This decision cooled the market significantly. Regardless, sales are still happening, condo projects are launching, and buyer interest is still present in the marketplace. Investors buying pre-construction condominiums still see Toronto as a highly desirable place to live. They believe that inflation will inevitably go down, as many economists do, some of them saying by the end of next year, we’ll be back down to 2%, while a recent consumer survey showed that people believe inflation will be down to 2% within three years.

So, there’s still some bullishness on the future of the new condo market. However, pricing was inflated compared to the re-sale market for a period of time. When investors started to look at the value gap between a pre-construction condo and a re-sale condo (typically 15 – 20%), they saw a 35 – 40% gap. There was some real trepidation or nervousness about that spread. In light of this, there has been a slowdown in the new condominium market.

Whenever you see pricing either stagnant or going down, it discourages people from buying. They may only have 5% to put down and want to avoid seeing that hard-earned 5% erased on paper within 3-4 months. So, even though they may not intend to sell in the future, they cannot always control their employment situation. In light of this, the rental market has been red hot, with rent increases between 30- 35% in specific Toronto neighbourhoods. So, it’s just unbelievable growth, and eventually, there’ll be some arbitrage as rental rates start to get so high that it makes sense again for people to buy.

Many developers feel that the rates are too high, demand is not there, and the rates they will pay on a construction loan are too high, making them nervous. So they’re holding back launches, which is challenging for our marketplace in the long run. We won’t get the supply level to service the demand, so prices will eventually go back up.

Acknowledging it is hard for someone to make a re-sale purchase today. However, there will be a significant lack of supply by 2027, so how should that impact acquisition options today? Each person has to look at their financial situation and try to make that choice. You don’t want to sell into a depressed marketplace, and if you’re looking to buy, the time to buy is to buy low, understanding how difficult it is to make that decision for people who’ve never purchased a home.

Toronto’s Real Estate Temperament: Rates, ReSale & Rentals:

On the new construction side, many developers are holding back launches and will push off until rates are lower and there’s more demand. There’s a big delta, 40, 50%, between re-sale prices at $1,000 PSF and new construction prices closer to $1,500 PSF. The majority of buyers for current projects are investors, and 95% of them will hold out for a project in downtown Toronto vs. the outlying areas.

Right now, the market depends on how the interest-rate inflation narrative plays out. Inflation’s going to come down. It was shocking that we had got inflation down to 2.8%. Then, it jumped back up to 4% the following announcement. It always makes you question Statistics Canada and the groups that pull this information together. It’s difficult to track some information, how much estimation goes to some of the published data and how much is missing that only the team that works on the actual numbers knows what’s missing and where the errors might be. But we’re returning to normal eventually, which could be in 2025 when we return to a 2% inflation rate. The Bank of Canada can start cutting rates to stimulate the economy.

If you look at the unemployment rate in Canada, it was near a 20-year low earlier this year, plus immigration and the population growth in Canada, particularly Ontario, have been just enormous. We’re talking about Canada’s 1.2 – 1.3 million increase in population annually, and 500,000 of that is in Ontario (compared to the typical 350,000). So there will be a demand for housing – we can only stick so many people in one house! There have been some adjustments in the geography of where people live, how many people per household, and how big the unit sizes are. So those things are all adjusting. But hopefully, in 2025, we’ll get back to that Bank of Canada target rate of 2% inflation, and we’ll start to see interest rates cut, and we might see the first cut in 2024 and the second and third in 2025.

People continue to love real estate in this country and want to buy, but they also want to find a deal. Many feel very strongly about the long-term prospects of the Toronto market – they think people will return to the office and want to be where the action is, where the bars are, where the restaurants are, where the single people are, where the universities and hospitals are. So they feel very comfortable buying in Toronto, but they’re looking for opportunities.

Over the last five years, we’ve seen a resurgence of new construction purpose-built rentals come up and done quite well overall. There are a lot of new developers and institutional money in the space. Policy around rent control plays a massive impact on the incentivization of a developer to build purpose-built rental versus a condo with the slowdown in launches of new construction condos. Even when you look at the discount that we’re seeing and the price of new condominiums, it still makes more sense to build a condominium than it does a rental apartment when you run the numbers. There’s just a different group of people that are operating in the rental space – institutions that want to invest long-term in class A buildings with higher rents, high-quality tenants, 5-star amenities and quality and features and finishes, especially now that rent control has been lifted. So there’s going to be a small percentage of those that come onto the marketplace. It can be challenging. There needs to be revenue certainty. There are still a lot of equity requirements upfront, whereas, in a new condominium project, one can borrow against the purchasers’ deposits for financing.

The Balancing Act: Developers, Governments & Affordable Housing

For every new development, a segment should be allocated to affordable housing. However, the current approach needs to be corrected. The complete onus has been placed on developers, and this needs to be more sustainable. If the goal is affordable housing, the government should step in. As private entities, developers shouldn’t bear this burden alone. Globally, there are established models:

  • Discounts on development charges
  • Reductions in community benefit charges
  • Expedited development applications
  • Incentives for increased construction heights

These can pave the way for affordable units, but these costs need to be absorbed and, consequently, recovered.

Many argue that these costs should be deducted from land value. But this is easier said than implemented. Landowners have expectations about their property’s worth, and with fewer straightforward sites available, many have income-generating ventures on these properties. Therefore, what a developer offers must substantially exceed this income.

If residents knew that every new condo tower meant 10% of its units would be rented for $1,000 to $1,500 monthly, perceptions might change. The underlying problem is more than just about ‘developers making profits’. By creating more non-viable sites, we reduce supply, thus increasing prices and heightening the affordable housing crisis. This dilemma isn’t recent; it has spanned over a decade, mainly because even the middle class finds homeownership elusive. The plight was overlooked when it was limited to minimum wage earners. Now, it’s a concern for many. High rises are not always popular, but with finite resources and restrictions on low-density construction in areas like the GTA, upward is our primary direction.

Reflecting on the middle class, a decade and a half ago, the typical disagreement in a divorce was about house ownership. Fast forward to now, with rents soaring and first-time home-buying ages skewing older, the contention is often over who retains the rental lease. The one moving out faces steeper rents for equivalent spaces, marking the times we’re living in!

From Parental Aid to Property Ladder: The New Normal for Toronto’s First-Timers:

Average rents have surged over the last decade, and many first-time buyers are now seeking education on property buying or actively purchasing homes. Given the challenging market, it’s almost a given in the city that parents assist their children with the down payment. Mortgage Professionals Canada reports that about 20-30% of these first-timers receive such aid. This creates an unequal dynamic where the well-off can invest and grow wealthier while others are priced out due to a lack of funds for a down payment. As the demand outstrips supply, prices in Toronto will continue to rise.

Developers are recognizing the need for diverse housing. Areas around Eglington, particularly Weston, will soon witness tremendous growth due to transport developments. Other regions, like Pickering and Mississauga City Center, are also evolving, providing potential opportunities for first-time buyers. In places like Vaughan Metropolitan Center, communities are steadily taking shape, resembling the communal feel of Toronto’s City Place.

Many potential buyers do not understand the property ladder that earlier generations were familiar with. They should remember that gaining a significant property requires multiple, calculated steps. Being able to afford any property is a considerable achievement, considering global cities like New York or London, where many never own. With the ever-growing emphasis on urban living, Toronto’s real estate prices will continue to rise. We can expect more high-density housing to replace single-family homes, further driving their value in the city

Smaller Spaces, Bigger Experiences: A Shift in Toronto Real Estate:

In the evolving marketplace, innovators succeed. Developers who continue using the same tactics may need help as buyer numbers dwindle. Investors favour properties that guarantee higher rents, making choices based on this. Developers that offer amenities such as co-working spaces and gyms attract buyers. While guest suites and party rooms remain popular, young individuals prefer compact spaces since they spend more time outside. These minimal spaces might not appeal to everyone initially, but many grow to love the lifestyle they offer.

In the evolving marketplace, innovators succeed. Developers using the same tactics may need help as buyer numbers dwindle. Investors favour properties that guarantee higher rents, making choices based on this. Developers that offer amenities such as co-working spaces and gyms attract buyers. While guest suites and party rooms remain popular, young individuals prefer compact spaces since they spend more time outside. These minimal spaces might not appeal to everyone initially, but many grow to love the lifestyle they offer.

Rental statistics show a rise in studio condo rents downtown, reflecting changing space requirements among generations. Globally, a 500-square-foot one-bedroom isn’t tiny, especially in densely populated areas. If individuals desire a downtown Toronto lifestyle, adjusting space expectations is inevitable. Living in Toronto, with its vast cultural and culinary offerings, means sacrificing space at home but gaining experiences citywide

A Peek into 2030: Sizing Up Toronto’s Condo Market:

So, what’s the going rate for a one-bedroom resale condo in downtown Toronto, and what is the average price per square foot? Fast forward to 20230, and we’re looking at roughly $1,600 per square foot. The average condo size is on the decline. While many are around 750 square feet in the re-sale market, newer condo projects often clock in under 600 square feet. This downsizing trend suggests that future averages might hover closer to 700 square feet. Doing the math could mean a condo costing around 1.12 million.

Remember the buzz in 2011 and the record-breaking first quarter of 2012? New condo projects fetched up to $600 per square foot back then. Roll on 11 years, and last year, we saw launches at $1,600 per square foot, a striking $1,000 increase per square foot in just a decade. However, the pace of this appreciation might slow down.

The last decade’s impressive gains may not be replicated as briskly in the coming years. Investors might need to adjust their expectations, settling for a more modest return rate. Yet, with Toronto’s growing global significance and its allure as a hub for students, tech entrepreneurs, and more, it remains a sound investment in the long run


Toronto’s real estate landscape stands at the crossroads of history, expectation, and uncertainty. From its rapid rise amidst the global pandemic, fueled by low interest rates and a surge in condo construction, to the cooling effects brought on by inflation and increased interest rates, Toronto’s market dynamics are nothing short of intricate.

Key market players, including the renowned Ben Myers, predict a fluctuating yet resilient pathway for the city’s real estate story. Challenges persist – from the balancing act of inflation and interest rates, the dilemma of new versus resale condos, to the conundrums developers face concerning affordable housing and land acquisition.

Yet, the city’s real estate allure remains undeniable. As we enter the future, innovations in property development, the shifting preferences of a new generation, and the desire for urban living in Toronto suggest a continued demand for real estate, albeit in evolving property types and new normals. The middle class’s struggle for homeownership, a testament to the ever-widening gap in wealth distribution, is palpable. The journey from parental aid to property ownership underscores the challenges and dynamics of the current era. Meanwhile, as spaces shrink in size, the emphasis on experiential living grows, signifying a paradigm shift in living preferences.

Looking ahead to 2030, Toronto’s skyline might be dotted with significantly more but not enough condos, with prices elevating in the process. As the city navigates the short term uncertain economic waters, one thing remains certain: Toronto’s real estate market, with its complexities and charms, will continue to be a topic of national discussion, reflection, and many watchful eyes (including ours)!

Article Contributors:
President of Bullpen Research & Consulting Inc., Ben Myers, boasts over two decades of real estate research experience across North America. A respected voice in the housing market, he has been at the forefront of industry insights, from heading research arms to being the executive vice president of a top condominium data tracking firm in Toronto. A recognized figure in the media, Ben has graced platforms such as BNN, CBC, and CTV and has been quoted by international giants like the Wall Street Journal and the New York Times. His written perspectives are sought after, appearing in esteemed outlets like the Toronto Star, Huffington Post, and Livable. Educated at prestigious institutions, including Columbia and MIT, Ben’s in-depth knowledge has guided top developers, major banks, and international hedge funds.

This article was written by Ralph Fox, Broker of Record and Managing Partner here at Fox Marin Associates. Ralph is a Torontonian native who recognized from an early age that the most successful people in life apply long-term thinking to their investments, relationships, and life goals. It’s this philosophy, along with his lifelong entrepreneurial drive and exceptional business instincts, that help to establish Ralph as a top agent in the real estate market in downtown Toronto.