TORONTO vs. THE WORLD – What Everyone Should Know (Part 1)

Published on 23rd August 2018

Having grown up in Toronto and being able to witness the transformation that our City has undergone is awe-inspiring. I wasn’t born in Canada but immigrated here when I was very young, which gave me some perspective on other cultures and countries as well. This is why I am forever grateful that my parents took a big leap of faith to start a life here.

I am even more grateful that I am an investor in one of the best areas in the world to invest in real estate. Why do you think there is so much talk about our City from non-Torontonians? The answer is because our city kicks butt! That, and of course, you can make a lot of money by investing in Toronto real estate.

Unfortunately, when we garner so much attention from other parts of the world, real estate here starts getting expensive. As with all markets, there is the factor of supply and demand that causes ebbs and flows with prices. This causation effect is happening right now as real estate prices are rising so quickly and becoming too expensive for locals.

Expensive is Relative – However, just how expensive are we relative to the rest of the world? Have a look at the chart below showing Canadian dollar per square meter.

Source: Numbeo

I find it funny how, as Canadians, we’re always using the metric system but we use the imperial system for real estate… so strange! Anyways, the chart below has been converted into the much more familiar price per square foot benchmark that we are accustomed to.

As it currently stands, we’re only #43 when comparing price per square foot to the rest of the world. According to this chart, we’re at $864.86 per square foot. One would think this sounds a little low in our current market. However, keep in mind the downtown core is over $1,000 per square foot, but when you factor in Scarborough, Etobicoke, Mimico, Don Mills & North York Condo nodes, it’ll bring the average down a bit.

So, Toronto doesn’t seem THAT bad, relatively speaking right?

North American Ranking – We’re not even in the top 10 in North America when it comes to prices, but we have the 4th largest metropolitan population in North America (only behind New York, Mexico City, and Los Angeles – we surpassed Chicago in 2016).

Source: Tom McCormback, Metro Economics

For the price that we pay and the size of our growing population, doesn’t it almost feel like arbitrage for us in be investors in Toronto?

Toronto As the Base – The table that I’ve put together for you below is really going to blow your mind. In the table below, you will see how expensive each city is relative to Toronto.

Vancouver is about 30% more expensive than Toronto, yet their market is still growing with a population that is only one-third the size of ours.

Everyone likes to compare Toronto to New York. The two are both super big metropolitan cities, but New York is almost double the price! Just imagine the property you own right now and having to pay twice what you paid for it! Let that sink in for a second…

Crazy Rich Asians – Here is an interesting perspective I have for you. Most people wonder why the Chinese are “so rich” and own so much real estate. Looking at the last table above, if you sell a property in Hong Kong, then you can effectively buy THREE similarly sized properties in Toronto. The same idea applied to Shanghai and Beijing would yield you TWO similarly sized properties in Toronto. Imagine people who did that 5 years ago when you could buy Toronto properties at approximately $650 per square foot – that would mean 1 Hong Kong property equates into 5 Toronto properties!! That was exactly what was happening, and continues to happen today.

The Wrap – This is the power of a growing metropolitan area such as Toronto, and that is why I’m grateful to be able to live and invest here. Some people wonder why I am so bullish on the real estate market but just ask yourself this: Is Toronto better than any of the 42 cities ranking higher in price point? If it is, then there is a very good chance that our prices will continue to go up in the long-run. We’re the 4th largest metropolitan area in North America, yet there are TEN cities more expensive than us.

To Be Continued… This is part 1 of TORONTO vs. THE WORLD. Next week, we’ll examine the growth that Toronto has experienced thus far.

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