The flourishing city of Toronto has seen significant developments over the past few years, and this has also played a vital role in influencing population growth and housing demand. The city consists of different levels of income earners, and real estate developers have to look into this fact and act accordingly. Moreover, it’s undeniable that the future of the real estate industry in Toronto relies more on the demographic factors compared to other issues revolving around housing.
The General View
With Toronto real estate developers now shifting their focus from the baby boomer parents to their millennial children, it’s evident that the next generation of Toronto’s population has the power to change the housing industry in the few coming years. Additionally, the number of millennials is projected to grow immensely, a trend that will likely increase the demand for new housing significantly.
Baby boomer parents are now downsizing their housing since they don’t require large spaces anymore. On the other side of the story, millennials are eagerly waiting to enter the market as boomers exit.
The Seller Market Vs Buyer Market Stats
The seller market is the group that is likely to sell their home while the buyer market looks into the age group that is more likely to buy homes. Unquestionably, people are always buying homes, regardless of their age. Nevertheless, estate developers are targeting the most crucial cohort—the first time home buyers who are typically aged from 25yrs to 40 yrs and are in their initial stages of starting families. Analysts project that this group will grow from to about 1.7 million by 2028. So, there is a considerable desire for family-friendly housing such as low-rise houses.
On the contrary, the seller market comprises individuals in the retirement age who are most likely to exit the market. In 2016, there were close to a million people in this group in Toronto only. Besides, the number is set to increase to about 1. 5M by 2029. Undoubtedly, the market sellers also occupy a sizeable share.
What’s The Impact on Demand and Prices?
Currently, there is a considerable difference in numbers between the seller and buyer markets. The buyers are way more than the sellers, but the gap is expected to drop in the coming years until 2040 when the seller market will be larger than the buyer market. Consequently, a larger selling group will be great for buyers due to the expected drop in housing costs. This does not leave the effects of inflation and interest rates out of the question.
Do Toronto’s Demographics Dictate Future Housing Types?
The market entrants are not ready to purchase the larger, expensive homes as the sellers exit the market. To cater for the boomer demand, real estate developers will need to build smaller, low maintenance homes, mainly bungalows in the smaller communities of Toronto. Moreover, boomer retirees will also need larger condos when downsizing. As said earlier, the market entrants will require budget-friendly, low-rise housing that will allow for family upbringing.
Undoubtedly, demographics will influence the future of the Toronto real estate sector. Most importantly, the effects of the market entrants and leavers cannot be underestimated. There is a growing need to provide smaller, low maintenance houses to accommodate the boomer parents and family-friendly houses for the market entrants. Moreover, the gap between seller market and buyer market is projected to drop significantly, and this will heavily influence the prices of houses in the near future.