How We take the Toronto Real Estate Market for Granted

Published on 3rd January 2020

I was originally born in Guangzhou, China but immigrated here when I was only 5 years old. As a result, my memory and recollection for anything related to China was essentially non-existent. My memories of China only started jogging when I went back to China for the first time in my early 20’s. I’ve been so ingrained in my Canadian upbringing, that when I recently went back to visit my family in China, they told me that I had an accent when speaking Cantonese (my native tongue). Strange phenomenon!

Discoveries Abroad – Over the last 10 years, China has changed SO rapidly, especially my birth city, Guangzhou. I recall my initial thoughts during my first visit back about 10 years ago – I had discovered a newfound appreciation for how great the air in Canada is and how clean Toronto is relative to Guangzhou. This time around, during our honeymoon stopover to visit family abroad, I found Guangzhou to be incredibly clean and well-kept. It is now so clean that I would even argue it’s cleaner than certain parts of Toronto! There are also no more illegal street vendors and all of the ground-level retail stores have been re-developed into fancier, newer retail storefronts. The city is incredibly high-tech and everything runs from mobile phones. Citizens no longer need to carry anything else besides their phone because literally everything resides in their phones – money, ID, everything you could possibly imagine and more. You can pay for everything using WeChat Pay or AliPay. From transit to night market vendors to even beggars on the street, they all have a QR code for acceptance of electronic payment. The city has developed incredibly fast from what I once remembered it as.

Change is What You Make of It – So the point that I’m trying to get across with all of this is that things can change, and sometimes very fast. You may not even notice the change. Over the last 10 years, Toronto has changed – the price of real estate in Toronto has changed and I’ve changed. The trip back to China this time around was the first time that I’ve returned to China since owning real estate property in Toronto. As such, with real estate always being on my mind (I can’t help it!), it has spurred me into doing some further research on how Toronto’s market has stacked up against the other major cities that I’ve visited. Let me tell you this – as a real estate investor, Realtor, and a Torontonian, we 100% take for granted how great Toronto truly is!

Make Toronto Great Again – To fully appreciate how great Toronto is, let me list some of Toronto’s statistics for comparison purposes.

Toronto, Canada
Population: 5.9 million (GTA)
Price of real estate relative to average income: 14x

Guangzhou, China
Population: 13million
Price of real estate relative to average income: 33x

The greater area of Guangzhou has approximately 35% of the population in all of Canada. In Guangzhou, you can take the subway from one end to the other in less than 2 hours. That should give you an idea of how dense Guangzhou is and why the price of real estate is so high relative to income. The cost of living in Guangzhou is not very high. When you compare the cost of groceries to Canada, it’s actually quite low. However, like with most Asian cities, the population is so high that it drives up real estate prices. More people equals higher demand. Speaking with all of my cousins in China, all but one don’t own any real estate and have completely given up their dreams of owning any real estate as it is just not realistic at this point. The city is growing and the price of real estate has actually dropped in the last 2 years – despite all this, housing is still unaffordable.

Hong Kong, Hong Kong
Population: 7.3 million
Price of real estate relative to average income: 48x

Hong Kong is known for having the most expensive real estate in the world and at 48 times the average income, owning real estate in Hong Kong is unattainable to say the least. My uncle owns a 620 SQFT 2-bedroom unit purchased in 2003, in what I would say is the “Yonge & Eglinton” equivalent of Toronto. The current market price for such a unit is about $1.35M CAD right now – that’s $2,183 per square foot for a 17-year old unit! Good luck buying anything when you also need a 35% down payment in Hong Kong (i.e., $472,000). The price of my uncle’s apartment has nearly quadrupled since his purchase in 2003. As a reference point, Toronto prices have only increased by about 2.5 times since 2003. Relatively speaking, Toronto still seems somewhat sustainable compared to Hong Kong. Many who Hong Kongers who want to live in Toronto and Vancouver can easily trade in one of their properties in Hong Kong for 2 or 3 Canadian properties. That’s some perspective! It’s no wonder why a lot of them have come to Canada in search of buying real estate here.

Ho Chi Minh City, Vietnam
Population: 9.3 million
Price of real estate relative to average income: 28x.

Ho Chi Minh City was definitely the least expensive city we visited on our Honeymoon adventure. The cost of a cup of coffee was approximately $0.30 CAD. However, I can’t say the same for real estate. Like many developing countries, there are pockets and nodes that are much more developed than others. We stayed in an Airbnb in the central part of Ho Chi Minh City, the “Yonge & Dundas” equivalent if you will. The 3-bedroom condo that we stayed at was approximately 1,000 square feet with 2 washrooms. Build quality was about the same as what we would get in Toronto. The cost to purchase this unit was approximately $1.1M CAD, which puts the area at approximately $1,100 per square foot. This is practically identical in pricing to downtown Toronto. The only catch for locals is that their average income is only a fraction of ours. As a result, affordability is at an all time low in Ho Chi Minh City. Oh, and here’s the kicker – Vietnam just opened up its economy to foreign investment recently, so expect real estate prices to increase even further.

Bangkok, Thailand
Population: 8.3 million
Price of real estate relative to average income: 27x.

The stats are very similar to Ho Chi Minh City. However, Bangkok is more developed. It has a fairly extensive subway system unlike Ho Chi Minh City, which has no subway. The word on the street is that lot of Chinese money is being invested into Bangkok. Surely enough, our Airbnb hosts in Bangkok were from China. We stayed in a very new 1-bedroom condo that was approximately 350 square feet. Surprisingly, the finishes were better than what we are accustomed to in Toronto. The size, although it sounds very small, was quite livable. For reference, builders in Toronto are selling 1-bedroom units that are approximately 450 square feet in the downtown core right now. Similar to Ho Chi Minh, affordability in Bangkok is at an all-time low.

The Grass is Greener Here – As you can see from the examples above, the cost of real estate in all of these major cities are approximately the same price or higher than that of Toronto regardless of whether you compare that as a ratio of average price-to-income or just apples-to-apples comparison in Canadian Dollars. The lifestyle and quality of life in Toronto, in my opinion, is much better than any of the major cities mentioned above. Furthermore, the currency and the value of the currency that we earn is much higher in Toronto as well. Effectively, this makes the ability for us to own real estate much easier.

The Wrap – Without a doubt, every time I come back home to Toronto, I have a newfound appreciation for how awesome our city is. This time around, in addition to all of the usual appreciation for comfort and lifestyle, I also have a newfound appreciation for how great our real estate market is and how affordable our city still is relative to other cities around the world (despite all of the constant chatter about how unaffordable Toronto is). Yes, Toronto is indeed becoming more unaffordable, but relative to many other cities in the world, we are by no means in a crisis yet.

Until we see the forest for the trees, Toronto is changing so fast that I think most Torontonians have taken for granted how amazing and affordable this city still is. We’re growing, we’re developing, and we’re getting bigger as more and more people around the world want to immigrate to and live in Toronto. You’ve heard it from me once and you’ll hear it from me again – Toronto is a world-class city that is only going to get more expensive as time goes on. Simply put, don’t take what we have for granted!

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