Introduction
We definitely think Toronto stands out in Canada, but we usually stay quiet when it comes to where in Toronto might see the highest growth because there are many uncontrollable factors involved.
But now that more deals are popping up, and cash flows are starting to look more similar across Toronto, more clients are wondering what might outshine the rest post-recession.
In another video, we talked about why Toronto semis might be the winners when it comes to home types.
But here’s the next question: which neighbourhoods make the best Toronto real estate investments in 2024?
Here’s what we think. Let’s get started.
Toronto Neighbourhoods For This Analysis
We’re focusing on semis in Toronto because they’re likely the smartest investment for stable growth post-recession.
In this analysis, we examine three different types of neighbourhoods in Toronto during the 2008 recession:
- Downtown Toronto, the most mature rental neighbourhood.
- Neighbourhoods like the Junction, which experienced gentrification 15 years ago during the last recession. It’s essential to note that the dynamics have moved to other neighbourhoods as the Junction is much more mature today.
- Budget-friendly neighbourhoods in Scarborough that weren’t as popular.
Mature Rental Neighbourhood During 2008 Recession: Downtown Toronto
Let’s talk about investing in downtown Toronto—it’s a smart choice because property values have historically been strong and stable. In the 2008 recession, downtown prices went up more than average Toronto prices before taking a dip, creating a bigger gap between high and low prices.
Basically, if you can buy at the lowest point and sell at the highest, you could see better growth—though nailing those exact timings is tough.
But even if you don’t time it perfectly, investing in downtown Toronto is still a safe bet for steady growth over time. The catch is being able to handle the higher purchase prices and ride out the shorter-term price changes.
Gentrifying Neighbourhood During 2008 Recession: The Junction, Toronto
In the last economic downturn, the Junction was becoming a trendier neighbourhood, showing less ups and downs compared to downtown Toronto.
This is precisely how gentrification works:
- Before this transformation, growth is typically slower than downtown Toronto.
- Once gentrification kicks in, there is a burst of faster growth, trying to catch up with more established areas.
- It will eventually settle to rates similar to downtown once it matures.
Looking at today, it’s unlikely the Junction will see that same fast growth again since it has matured substantially compared to 15 years ago.
What this means is that you need to find neighbourhoods that are in the earlier stages of gentrification in 2024 if you want to take this strategy. In that case, you might experience quicker growth for about 5 to 10 years compared to downtown before it levels off and matures.
Low Budget Neighbourhood During 2008 Recession: Scarborough
Now, let’s talk about Scarborough, which is probably the most budget-friendly neighbourhoods in Toronto. However, because it’s affordable, it had a bit of a reputation 15 years ago.
Even though it’s the most economical choice, Scarborough had the slowest overall price growth due to being less desirable.
Additionally, it took longer to bounce back after the recession compared to other Toronto neighbourhoods.
Toronto Real Estate Differences In 2024 Compared To 2008
Stepping back, it’s important to note that we can’t directly apply trends from the last recession to predict what might happen this time around:
In 2008, prices fell at the onset of the recession. This time, real estate prices have already faced challenges due to recent steep interest rate hikes, which had a significant impact on our market earlier.
Coming out of the recession, we anticipate that prices won’t rebound as quickly as last time since interest rates aren’t expected to drop as rapidly.
Keep in mind that Toronto neighbourhoods undergoing gentrification are evolving. To make informed decisions, it’s crucial to understand what’s currently happening with local growth in Toronto.
What Interest Rate Projections Tell Us About Where Toronto Real Estate Is Headed In 2024
Right now, variable mortgage rates are about 6.8%. According to predictions, these rates might drop by around 1% by the end of 2024.
What this means is that Toronto property prices can go up by 10%, and mortgage payments will stay the same. This creates an opportunity for potential growth if the rate predictions come true.
Although property prices can be affected by things like rental trends and unexpected events, we believe Toronto will remain the most resilient city in Canada.
Being the hub for finance, culture, and entertainment, Toronto has strong housing demand. And with a limited housing supply, this should provide solid support for both prices and rents.
Best Toronto Neighbourhoods With High Growth Potential
This Toronto neighbourhood analysis highlights two promising neighbourhood best picks for 2024 that could excel in the medium term:
Mature Neighbourhoods: These are consistently safe choices. Purchasing now in 2024, in areas like downtown Toronto where real estate prices have dropped more than the average in Toronto, offers the potential for higher gains when the market rebounds.
Early Gentrification Neighbourhoods In Toronto: Investing in early gentrification neighbourhoods are a top pick due to the potential for higher growth as these Toronto neighbourhoods undergo positive transformations.
How We Can Help
If you want to know our best Toronto neighbourhood choices for 2024 and find the perfect investment opportunity in Toronto just for you, let’s chat!
Schedule a private call by hitting the button below, and we’ll discuss your goals, preferences, and make sure you get the ideal Toronto real estate investment for you.
