Toronto’s luxury housing market is officially out of the doldrums.
That’s according to Sotheby’s International Realty Canada’s President and CEO Brad Henderson, who notes that sales for GTA homes priced $4mln and above spiked 34%, while the $1mln-plus category climbed 19%.
“I don’t think it was in the doldrums as much as people thought it was,” Henderson told REP. “The first quarter of 2017 saw an historical number of sales in the Toronto market and that was primarily driven by the fear of missing out. When the Ontario Fair Housing Plan came into place, it chilled the market significantly, not because of the foreign buyer tax itself causing the market to pull back, but because it was a shock to buyers and sellers. When that kind of thing happens they freeze.”
Given the psychological impact that government intervention has on consumers, there’s little suggesting Henderson is wrong. Another reason for the market’s burgeoning robustness is a significant cohort has entered its peak earning years.
“They’re likely going to spend more money on homes,” said Henderson. “Let’s face it, prices in the city of Toronto are, more and more, in the $1mln to $3mln range. We expect the Toronto market will see increases in activity, and as there continues to be a shortage of inventory, there’s a very good chance of upward pressure on prices.”
According to Matt Smith, a broker with Engel & Völkers in Yorkville who specializes in the luxury market, the city’s thriving tech sector has been fueling demand for high-end homes.
“A new trend is on the horizon that will continue to push Toronto’s housing market and its luxury segment, and it’s the impending tech boom,” said Smith. “In the last five years, Toronto has created 82,000 tech jobs, more than Silicon Valley and more than any other city in North America.”
Tech sector jobs in Toronto are known to remunerate handsomely, and according to CBRE, Toronto ranks as the fourth-most important tech hub on the continent—up from 12th place only two years ago.
“And it doesn’t stop there,” said Smith. “Just last month, Microsoft announced a new headquarters in downtown Toronto, and Intel announced earlier this month their intentions to create a new chip manufacturing plant in North York. Without a doubt, hiring in the tech sector is a big factor driving the market, which has, both directly and indirectly, impacted the luxury market in a positive way.
“When we talk about North America’s great tech incubators, we mention Seattle, San Francisco, New York City and D.C. Toronto has now earned its place in the conversation, and as long as the talent and capital continues to concentrate in Toronto, this trend isn’t going anywhere any time soon.”