The Greater Toronto Area is riding a couple of propitious waves—namely exceptionally high job growth and immigration levels, both of which show nary a sign of abating.
Marcus & Millichap released a report last week detailing the GTA’s prosperity and noted there had been 81,600 jobs created through the first half of the year.
“Employment grew at a rate of 3.4% year-over-year in June, a substantial rise from the 2.9% pace posted one year earlier,” read the Marcus & Millichap Multifamily Market Report. “A less restrictive immigration policy in contrast to the U.S., coupled with a mature tech ecosystem backed by government incentives and world-class universities, has Microsoft, Amazon, Pinterest, and many other global firms searching for talent in the metro. A healthy economy and labour market have been a boon for household formation, a key driver of apartment demand, contributing to a strong rental market over the last few years.”
The report also alludes to a market opportunity B-20 has created for real estate investors. Citing the benchmark price in June of a single-family home in the GTA ($875,000), Marcus & Millichap shines a light on burgeoning rental demand in the region. At the conclusion of 2018, the average rental unit in Metro Toronto was $1,370, 4.7% higher than the previous year, and still around $2,000 less in monthly payments than a single-family detached home.
“A challenging housing market, particularly for first-time buyers, has led to rental demand far exceeding supply growth, holding the vacancy rate at a tight 1.1% last year,” said the report.
The report also cites investor interest in the GTA market, resulting in a 9% increase to the average purchase price as it surpassed $277,000 per unit.
“Assets in the heart of Toronto changed hands at an average price just below $300,000 per unit. Greater affordability was found in Brampton, Scarborough and Oakville, with properties trading on a per unit basis in the low-$200,000 band.”