Good ’Hoods: Best Toronto Neighbourhoods for Real Estate Investors
Like many (including us), you might be eyeing Toronto’s hot housing market wondering if now is the time to make your entry with an investment property. Though the city’s seller’s market could dissuade some would-be investors from throwing their hat in the ring, there’s still an opportunity to buy lowish and await the long-term gains.
While it’s normal for real estate activity to pick up pace leading up to the spring, with lots of competition spurred on by high demand and low inventory, winter 2020/21 has seen accelerated year-over-year movement. It started with elevated action in the ’burbs. Buyers there aggressively chased higher prices, sometimes outbidding already-hiked prices from only a few weeks prior. This drove up home prices in the Greater Toronto Area, to the extent that in January, the average selling price grew 15.5% year over year to $967,885.1
An opportunity awaits
Almost, but not all, home types rose in price. If you look closely at the Toronto Regional Real Estate Board (TRREB)’s numbers, you’ll see there’s one outlier that failed to perform the acrobatic year-over-year jump: condo apartments.
The average price for the condo sector in Toronto has dipped 8% year over year to $624,886.2 There are several factors that could have contributed to the decrease in average price, but the foremost is that inventory levels of available condos are much higher this year than we’ve seen in the past (in January, they were nearly double what they were a year ago3), which has a lot to do with buyers wanting more space now that we’re spending more time at home, as well as fewer employees needing to stay in the city because they're working remotely.
Higher inventory levels give buyers more negotiating power, which is good news for investors planning to buy and rent out a condo. While rental demand among Canadian residents was strong in 2020, a halt in immigration and non-permanent migration contributed to an increase in available units, which has given renters negotiating power as well and driven average rental prices down.
But, as we look ahead to times when the pandemic doesn’t affect our daily lives – when people begin crossing borders once more and tourism resumes revitalizing the short-term rental market – condos for sale and units available for rent will likely decrease, closing the gap between inventory and demand and ultimately increasing average sale and rental prices.4 That’s where you, the investor, stand to gain.
Consider: it might be safer to stay clear of downtown and invest instead in a recently gentrifying neighborhood. There’s still a dip to buy in their condo markets, but these ’hoods have already seen some rebound mid-pandemic.
Take the billion-dollar, City-initiated Regent Park, an epic gentrification in its final stages. Condos and townhomes stand in comfy tandem with subsidized housing, and there’s plenty of space on the ground floors of new buildings for retail opportunity. Many condo units are likely to be affordable in this area because the City of Toronto is invested in seeing Regent Park’s revitalization succeed and grow to a mixed-income neighbourhood over the next decade.5 You could be part of it!
Go a little farther east and consider investing in Leslieville. Here, much work has already been done to gentrify a highly sought-after home address for the hip, artsy and outdoorsy, but Leslieville has begun another new phase with its growing condo market. Mixed-use investment is also an attractor: buildings with residential space above street-front retail are common.
Head the opposite direction and you could try The Junction. It may be out of the way, with the conversion of its grittiest remnants as yet incomplete, but young professionals are willing to come west for the vibrant community and more space than a condo in the core. What they find is a very visible street-level revitalization, a genuine success.
Discover where you might invest in a Toronto condo apartment with the help of a Purplebricks REALTOR®. Purplebricks provides full-service experiences with incredible rewards: our sellers save thousands in commission and our buyers receive $2,000 cash back* when they purchase a home with one of our REALTORS®. Call 1-855-999-9740 to learn more.