This real estate agent explains why Toronto’s condo market is only going to get hotter

Recently, my boyfriend and I have been thinking about moving on from our beloved apartment of almost four years.

It’s a very cute place, but it’s also quite small and we were hoping we could find something that’ll give us a bit more space. In our search — which is proving to be even more difficult than anticipated — we’ve realized that all of the units that are meeting our list of “must haves” are in condo buildings.

The problem with that? Not surprisingly, they’re all crazy expensive.

In chatting with various people in the know about the current Toronto real estate market, many have advised to not move quite yet but to instead wait it out — because surely when the housing market crashes (which it will, they say), rent will go down. Right?

Well, maybe not.

We spoke with Jamie Johnston, an experienced Toronto realtor who had lots to say about the condo market in Toronto — specifically that it’s showing no signs of slowing, and it might be best to get in now.

Here are his thoughts on why Toronto condo prices have room to run.

Millennials are pouring in. And soon, the boomers will, too

It’s no secret that millennials (those currently in their 20s and early 30s) are doing whatever they can to get their feet wet in the Toronto housing market these days, like buying with friends or family, or setting their sights on a condo rather than a detached home.

“We’re definitely seeing millennials making a big push in the market right now,” says Johnston.

“And many of them are having to readjust their expectations, especially in the last year. More and more families downtown with young kids are living in condos as opposed to detached homes.”

Johnston mentioned that they’re also slowly starting to see baby boomers downsizing and entering the condo market. “At this point, it’s not a big component in the market. But it will be in five years,” he says.

In the coming years, many boomers will find themselves thinking about selling their large family home and opting for a condo instead — since their adult children will likely have finally moved out. This cohort will be looking for a more modest-sized living space, meaning the market for condos will keep growing.

The supply of detached homes doesn’t meet demand

Another reason the Toronto condo market may not be slowing anytime soon?

Good ‘ol supply and demand.

While just about everyone would love to live in a detached, single family home — the reality is that there just isn’t enough of them available to meet the increasing demand.

And that’s where condos come in.

In an effort to combat urban sprawl, the provincial government is working on new legislation that will ensure municipalities are equipped to properly handle their growth. One of the proposed changes is the requirement that “at least 60 per cent of all new residential developments in municipalities are in existing “built-up” areas.”

So, what’s this mean for the condo market? It means that developers are being told to keep doing what they’re doing: more condos, more cranes, and a lot less options out there for single-family dwellings.

Then, there’s Airbnb

There’s also something else at play in the Toronto housing market not to be overlooked: Airbnb.

When Airbnb, which allows homeowners to rent out rooms or their entire place online, made its way to Toronto, would-be hosts in the city learned pretty quickly just how much more money they could make utilizing the short-term rental site versus having a traditional tenant. In some cases, listings in Toronto have earned more than $100,000 in a single year.

This means that lots of new condos are being rented out on Airbnb — even as most condo buildings having restrictions around short-term rentals.

“People don’t ask about Airbnb, they just do it. And it’s illegal,” says Johnston. “Most condo buildings have minimum rent periods in their buildings — usually a minimum of three months — [and] anything less than that is not allowed. So they really shouldn’t be doing it, but people go ahead and do it anyways and aren’t getting caught.”

While Airbnb certainly isn’t helping the market, Johnston doesn’t think it’s a major factor at play.

“I don’t think that the crazy market is just because of Airbnb,” he says. “It’s crazy because there just isn’t enough product out there.”

Final verdict? Don’t hold your breath for a crash

Plenty of people are sitting on the sidelines right now, hoping prices go down before they jump into the market. But as Johnston points out, there are a lot of factors driving the market, and they’re not going away for a while.

We’re certainly not saying prices will go up for ever. But if you’re waiting for a market crash — well, you could be waiting for a while.