Toronto is the 2nd most overvalued market in the world—so now what?
Making the rounds is a new story stating that Toronto is the 2nd most overvalued property market in the world; what’s number 1? Munich. It’s understandable that homeowners in Toronto are meeting this news with a sense of dread, but if you look a little bit closer, there’s no reason for alarm, at least not in the short term as explained by the Financial Post.
Low supply and low mortgage rates are still driving the bus Toronto and there’s absolutely no indication that we’ll see a bubble burst any time soon. But what this story does suggest is that buyers will need to start assessing the value of properties a bit differently. Condo buyers in Toronto for example, try to buy as close to downtown as possible, but there’s competition downtown so prices get inflated. A good number of recent condos offer smaller units to give buyers an affordable option, but if you go for a generic downtown condo and buy one of those $500k micro condos in a building like this Temperance Street tower, you might be setting yourself up for a fall.
Now I’m no real estate guru but common sense tells me that smaller units with high price tags, and they’re all high, are going to depreciate the most if the bubble bursts. Neighbourhood is definitely a factor, but a comfortable unit in a not so hot neighbourhood like, oh I don’t know, Willowdale, should hold up better than a bowling lane condo downtown.
Square footage matters—no matter how much real estate experts try to tell us it doesn’t. Everyone knows “location, location, location” but I think there’s something disingenuous there when applied to Toronto. Location matter s a lot now. But if the bubble does burst and all these faceless condos have tiny suites that are depreciating in value faster than Dreamcast in the 90s, then I think location won’t mean as much.
To buy now, you’ve got to find a balance between size and features and where the condo’s located. Some others like the Globe, have warned about the potential for a poor investment and I think there’s so much potential for that right now. People need to buy smarter and maybe focus on a forever home as opposed to a started. I know that’s a tall order in light of how prices are, but if you’re shorting yourself on size for the sake of location, you might find that the tiny condo you bought just isn’t desirable anymore when you go to sell, and that could really hurt your wallet.
It's time for Toronto to embrace car free living
When the King Street Pilot Project became permanent, many drivers vented their frustrations and cried out about how this would ruin driving in the city—of course, it didn’t ruin driving at all, and King Street is a much better strip now that traffic has been alleviated. But a part of me wonders if “ruining driving” would actually be a bad thing for Toronto.
If you live in North York and you’re commuting to downtown, you might think that there’s a war on drivers and every decision that’s made hampers your ability to commute. But If more streets in Toronto weren’t open to cars, then transit options would surly improve. Driving to downtown Toronto from North York can take anywhere from 30 minutes to an hour depending on whether there’s an accident or not; subway service already rivals that time, and an express train would shave off even more. The problem is, there’s no desire for such advances in transit yet because so many people still drive.
That’s why projects such as the King Pilot need to continue in downtown Toronto and extend towards the surrounding areas. Still, that’s not enough and it’s time for developers and condo residents to start asking—do we need parking here or should we encourage residents to embrace transit? If you live in King West at a building like the ultra popular Massey Lofts then living car free is already an option, but it should be an option anywhere in the GTA.
I’m not the only person thinks this: Huffington Post and a number of other publications have raised this issue but there’s always heavy push-back from drivers, which has likely prevented the city from going further. Unfortunately for those drivers, their opinions don’t really matter, because with the GTA’s population expected to reach 9.7 Million by 2041 we cannot possibly handle more cars on the road.
Anyone who’s driven on the Gardiner, DVP, or QEW knows that congestion is already at a tipping point—my friends and I often joke about the Mississauga slow down, a phenomenon where simply passing by Mississauga on the QEW causes you to slow to a crawl from people merging. Think about that, merging is expected on the road and yet it consistently results in traffic jams, which suggests in no uncertain terms that this eight-lane stretch of highway can’t handle the number of cars passing through.
The streets of downtown Toronto are even more congested than that, and the only solution is that we utilize methods of transit that carry more passengers—and hey, it might even save the planet. Many who live in Toronto can remember the hoopla when the star ran an article about a no parking condo; if that upset you, I’d suggest moving somewhere else, because it’s only a matter of time until this rare practice becomes the norm.