Should You Invest In Toronto Real Estate In 2023?

Should You Invest In Toronto Real Estate In 2023?

If you’re looking to build wealth through property investments, you’ve come to the right place. With countless cities to choose from, it can be challenging to determine where to invest your hard-earned money. 

We firmly believe that Toronto is the ideal city for real estate investing in 2023, and we’re excited to share our top reasons why! Whether you’re a seasoned investor or just getting started, we’re confident that our insights will help you make an informed decision about investing in Toronto.

Toronto Has Amazing Market Appreciation Potential

Toronto, like many other major cities in the world, is facing a significant challenge when it comes to finding space to build new developments. There is simply no more new land to build on in Toronto!

This means that any new construction projects will have to rely on existing buildings and areas that can be redeveloped. As a result, Toronto is experiencing a shift towards densification, where buildings are being built taller and with more units per floor to accommodate the growing population.

On the other hand, Toronto boasts a diverse and stable economy, which attracts a constant influx of people moving to the city for job opportunities. As Canada’s tech hub and the second-fastest-growing urban centre in North America, the demand for housing in Toronto remains consistently high.

This combination of limited supply and growing demand for housing results in residential real estate in Toronto appreciating much quicker than in other cities.

In the past decade, the average annual appreciation of Toronto’s residential real estate market has been a remarkable 8.3%! With this level of growth, investing in Toronto’s real estate market is undoubtedly a smart decision.

Home Price Index (January 2005 = 100)

Toronto Market Appreciation vs. Major Canadian Cities
Source: CREA, April 2020

Investing In Toronto Means A Lower Risk Investment From Market Fluctuations

In some cities, real estate prices can be more volatile due to fluctuations in demand caused by a decline in production in single-industry cities or speculative investment in development plans. This could seem good when the market’s very strong, but it can also mean bigger losses when the market turns the other way.

Unlike these cities, Toronto’s real estate market is supported by a genuine need for housing and supply can’t keep up with growing demand.

This results in greater price stability for the residential real estate market in Toronto, making it a comparatively lower-risk investment option than other cities with higher volatility.

Toronto Housing Crisis

Toronto housing crisis
Source: City of Toronto Housing Market Analysis 2019; CMHC 2020; 2016 Census

Assessing a market’s strength during tough times is one of the best ways to gauge its long-term potential.

The recent global pandemic has had a significant impact on real estate markets worldwide, with prices rising across Canada due to record-low interest rates before falling just as quickly as rates climbed. However, unlike other parts of Canada, Toronto’s real estate market remained more stable relatively, showing early signs of resilience and support.

The fact that Toronto’s real estate market weathered the pandemic storm relatively well speaks volumes about its strength and stability.

Despite the economic challenges posed by the pandemic, Toronto’s real estate prices did not fluctuate as dramatically as in other parts of Canada, indicating a more stable and secure investment opportunity. 

With a market that demonstrates such a high level of support, Toronto’s real estate market is undoubtedly an attractive investment destination for those seeking long-term financial growth and stability.

Toronto Multiplexes Have Strong Rents With High Growth Prospects

Generating stable rental income is crucial to any real estate investment strategy. Not only will it increase your returns, it also gives you strong holding power, so that you can choose to sell – only when you want to!

The best rental properties are those that provide consistent cash flows that not only cover the property’s expenses and mortgage payments but also bring in excess cash flow. This is definitely possible today for multiplexes in Toronto!

With high property prices, an increasing number of people in Toronto can only afford to rent, leading to a high demand for rental properties and virtually no rental vacancies.

When you combine the growing population with a rising percentage of renters, the demand for rental properties in Toronto continues to increase, which also makes it an attractive investment opportunity for those seeking a steady and growing source of rental income.

2020 Rent Growth By City

Toronto Rent Growth vs. Major Canadian Cities


Developments in Toronto Offer Tremendous Growth Opportunities

Toronto’s thriving economy and rapidly growing population attract significant attention from both public and private sectors.

Many of these entities aim to enhance communities and increase the housing supply, which has led to an impressive number of ongoing development projects.

As of 2023, Toronto tops the active crane count in North America. Public transit development is another major priority in Toronto and contributes to the city’s gentrification.

On top of market appreciation, properties located in areas where development projects intersect to improve a neighbourhood are likely to benefit from a further increase in property values. With more development projects in the pipeline, properties in Toronto are poised to experience better growth due to gentrification.

Toronto Public Transit Plans (2022)

Toronto transit plans

Better Selection Of Value-Add Appreciation Opportunities With More Older Homes In Toronto

Toronto is known for having many century-old homes that are in need of a lot of work. 

While other cities may have newer homes that require minimal renovations, purchasing and renovating these older Toronto homes can unlock a significant amount of value for investors. By purchasing and renovating an older property to bring it up to its highest and best use, investors can experience a substantial increase in property value.

For example, an investor purchases an older house in Toronto for $1,000,000 and invests $100,000 in renovations. After the upgrades, the house is appraised for $1,200,000. This increase in property value of $200,000 is equivalent to a value-add appreciation of $100,000.

On to of this, Toronto’s housing crisis has led to a unique solution for increasing rental housing supply: allowing for the conversion of every house in the city into up to 4 separate units, as well as the addition of a laneway suite or garden suite in the backyard. This is a significant departure from many other cities that have much stricter regulations in place.

By taking advantage of this opportunity, property owners can greatly increase their rental income potential. Converting a single-family home into multiple units means that each unit can be rented out separately, generating much more rental income compared to renting out a single unit in a property.

Toronto's Diverse World-Class City Attracts High-Quality Tenants

Toronto’s strong economy and high cost of living often attract a tenant pool with higher income levels and more responsible financial and social behaviour. This can lead to a more desirable tenant pool for property owners.

Moreover, Toronto’s growing population and high demand for housing mean that landlords have their pick of tenants. This competition among tenants can result in a more responsible and respectful tenant pool. 

Finally, for those who are looking for high quality tenants, it typically goes both ways. Landlords who invest in their properties and offer quality housing are more likely to attract and retain better tenants.

How We Can Help

Toronto’s residential real estate market offers an attractive long-term investment opportunity with a good balance of cash flows and appreciation. Residential real estate is a necessity, making it a more defensive investment option during financial crises.

Our team can help you navigate the real estate investing journey with ease. We want to make real estate simpler, which is why we provide a comprehensive range of services that support you from planning and analysis to sales, renovations, leasing, and property management, we’ve got you covered.

Just book a free call with us to get started!

Are You Ready To Start Investing In Toronto Real Estate?