Toronto Comes of Age!
New York, London, Paris … Toronto? Should we be looking at ourselves as one of the world’s major cities? Has Toronto, being the industrial and economic centre of our country, matured to the point where we are attracting international attention? As our city has grown over the past few decades, many newcomers to Canada invariably locate in and around the GTA. New immigrants to Toronto since 1991 number 516,635, representing 21 per cent of our population and fully one in five Toronto residents arrived in this country during the 1990s. Toronto is the fourth largest city in North America behind New York, Los Angeles and Chicago. We have a population of almost five million in our metropolitan area and a cultural diversity that is unparalled in most other large cities. Over 100 languages and dialects are spoken here, and over one third of Toronto residents speak a language other than English at home.
I recently came across an issue of Conde Nast’s travel magazine that had a story dedicated to our city. The sentiment was that Toronto until very recently has had a very low level of international awareness, but that’s all starting to change. There are many factors that are changing how the rest of the world looks at us. We are building striking new entertainment venues. We are learning how to boost our many other assets too. Being such a multi-cultural city is reflected in our different neighbourhoods with their many unique restaurants and shops. Consider the following projects: the new Opera house, the redesign of both the ROM and AGO. These are major moves forward to help boost tourism in our city. Toronto is recognized as the third-largest theatre centre in the English-speaking world, after New York and London with over 90 venues in the GTA. Our new mayor has also been working very hard to bring attention to Toronto at the international level and continues to sell his dream of an eventual cleaned up and publicly accessible waterfront. Our transit system is the second largest in North America next to New York City and our airport is by far the busiest in the country and the fourth busiest in North America. Toronto has an excellent telecommunications infrastructure in terms of access lines with digital switching and advanced signaling technology. Toronto is also located in the largest flat rate calling area in the world, and has the most fibre optic cable of any city in North America. Toronto’s highly skilled, educated and multi-lingual workforce provides the knowledge and know-how to keep Toronto businesses ahead of the rest and Toronto is Canada’s largest retail market, representing $33 billion or 14 per cent of total Canadian retail sales.
Foreign investors are paying attention. An article in the Globe & Mail yesterday highlighted how Australian investors have been knocking on the doors of Canadian real estate companies for some time, looking to put their money into our city. Industry experts at a real estate conference in Toronto sponsored by CIBC World Markets said that other deals with foreign investors are sure to follow. It seems that Canadians do not realize the potential that foreign investors see in a vast county that sits next door to a huge customer. For that reason, other investors such as the Europeans and oil-rich nations may also turn their attention here. We have already seen the Asian influence, particularly in the condominium sector.
Compare average house prices in Toronto to the inner core of other world class cities and you’ll see that there is still a lot of value here in our city. When people say that the market in Toronto is too hot and how can prices continue to go any higher, ask them to go to a major city in Europe. Consider the price of a 1000 square foot downtown condo compared to most other large American cities. If we are to be viewed as a major city then I feel that there is still room to move on house prices, particularly in the downtown and more exclusive neighbourhoods. Shopping centres and retirement residences will also continue to flourish. Many pension players will be looking to real estate as a major part of their growth strategy for the years to come.
I have been on-line to compare the relative housing prices in major North American cities. It’s hard to get an exact percentage difference, but there’s no question that Toronto prices are lower than similar sized American cities. Take a look at the average sale prices of a 2200 square foot detached two-storey in a low-crime neighbourhood. (from a study conducted in 2004)
Toronto 398.6 Dallas 400.4 Atlanta 452.8 Vancouver 571.9 Chicago 629.3 Los Angeles 732.2 Washington 835.0 Boston 942.5 San Francisco 1,197.5 New York 1,445.2
This demonstrates that Toronto is the most affordable city to reside in. Of course as our dollar continues to rise against the US dollar, this gap gets smaller. When you factor in that basic consumer goods are less expensive as well, it’s not surprising that the demand for real estate in our city continues to be very strong. Note that even though we are the largest urban centre in the country, Toronto prices are still below Vancouver.
Another interesting study I found on the Internet (www.urbanplanet.org) compared living in Toronto to Atlanta, Boston, Houston & Miami. Readers were polled to choose where they would like to live the most based on the following nine criteria:
- Cost of Living
- Economy, Growth (good and bad)
- Overall Crime
- Geographic Location
- Growth Policies
- Mass Transit
- Diversity of People
Naturally some of the respondents found our winter to be a negative relative to these other towns but Toronto seemed to be the overwhelming favourite in most of the other categories. This is interesting given that this was an American survey. Boston was clearly the second choice.
I think that it’s going to take a number of years before our prices reach that of larger American cities. So long as this continues to be the case, I wouldn’t bet on a major down-turn on prices in the city core. We see so many homes that are being renovated because people want to be close to downtown, close to shops and restaurants and close to where all the action is. People want convenience and most importantly, insofar as real estate is concerned, people want value. It would appear that Toronto, world class city that we truly are, will continue to provide that value.
Next month I will unveil a new look to this newsletter as I discuss some of the ups and downs of renovating for capital gain. Don’t forget to change your clocks this weekend and to get your taxes in before the end of the month.
All the best!