Member Workshop | GTA Housing Market Insights: Trends, Forecasts & Strategies

this meeting is being

recorded okay well welcome everyone good morning um my name is Carly Laxon orals and I'm a manager of member and partner success here at the torona region Board of Trade uh thank you for joining us this morning um working with our valued member Toronto Regional Real Estate board's uh virtual Workshop which we're focusing on GT a housing market insights Trends forecasts and strategies uh this session is designed to Pro provide you with valuable insights that you can't find elsewhere ensuring you stay ahead of the curve in understanding market dynamics I'd like to introduce Jason Mercer who is treb's Chief Market analyst who will be providing you with data driven perspectives and forecasts before I pass the mic over to Jason I'd like to acknowledge this land on which we are meeting in is home to diverse Nations Inuit and metis people though you could be joining us or watching from afar the board's offices are located on the traditional territory of many indigenous Nations they share with us a sense of responsibility for intergen generational Equity the well-being of today and tomorrow um just a few housekeeping notes before we do get started we will be opening the floor at the end of Jason's presentation for questions and answers um and there are going to be two ways that you can ask your question it's either by raising your hand using the the zoom prompt um or by simply typing your question into the general chat and I will try my very best to get to all questions in a timely manner as well as in the order in which they're received and now without further Ado I'd like to pass the Baton over to Jason to get things started thanks very much Carly and to the rest of the Board of Trade really happy to be here today and we appreciate the invite to talk to such a diverse group you know Carly sent the uh list earlier this morning of all the people that have signed up for the presentation and it's great to see some familiar names and some faces here um online and and certainly you know happy to see that we have people you know there's members that treb on the call today but people stakeholders across um the the real estate space with an interest in the GTA and and broader uh ggh market so Carly just before we start can you confirm that um you can see the the title slide on the fullen screen correct confirmed all right great so what I'll do is I I'll speak for about you know half of our time here today so the next say 25 or or or 30 minutes just sort of hitting the highlights of the of the ggh market um as we see it and you know I'm really hoping that given that we got a large and diverse group here today that will um get some additional questions that can sort of build on my uh my initial discussion and so I'll jump right in and I wanted to just start um thinking about population growth because if you think about the the demand for for housing in a region like the GTA or or broader greater Golden Horseshoe um it's really population growth that that drives that demand whether we're talking about ownership housing um or whether we're talking about uh rental housing and you know for the last decade or more the real driver of of population growth um in in the greater Golden Horseshoe has been has been immigration um and in fact you know as we came out of the pandemic um certainly over the last two to three years years and likely for the foreseeable future um immigration is going to be running at or near record levels and we can see the impact of that if we look at just sort of Ontario immigration um that's reported on a quarterly basis so a little bit more frequent than down to the the regional level you know we've seen a real marked uptick um as we move through 2021 um up to where we are today where you know we used to see about 30,000 um you know immigrants moving into the Ontario area per quarter um that's jumped out quite substantially to the point where we're seeing about 880,000 more immigrants per year um in the postco period um compared to what we had seen previously and obviously all of these individuals and and related households uh need a place to live and that's even more important when we think about the dynamic of people sort of Shifting you know from the rental housing market uh into the home ownership market and just for a little bit of background um every year at the end of each year um treb partners with ipsos um to do some some uh consumer survey work pointed at the housing market and underlying drivers um and and one of the things we've been asking over the last number of years um is is is whether you know people were born here that are responding to the survey or whether they moved here from from somewhere else and and obviously when you start asking questions about housing to those two different cohorts um you do see different answers and one of the things that we find um is that while a lot or the majority of of newcomers to Canada initially choose to rent uh the home that they're living in ultimately a lot of these newcomers a lot of these immigrant households want to move into that home ownership market and interestingly they actually make that move from rental housing and into Home Ownership uh more quickly um than than households that um are born here and so you know that that's a significant finding when you're thinking about the demand for for owners ship housing certainly um as we move forward um but it's also you know interesting to move Beyond um just immigration um and certainly if you've been reading you know the newspapers or certainly been listening to talk radio or what have you a real topic of conversation that's come up over the last couple of months just based on new data that was released by statistics Canada and analyzed by you know a number of different organizations is this notion of of movement out of the city of Toronto or tradition sort of GTA boundaries both other parts of Ontario other parts of the greater Golden Horseshoe but other parts of Canada as well and so it's important to look at that uh or look at population growth not just through the lens of immigration which you know is the key driver of of of population growth in the GTA and surrounding greater Golden Horseshoe but then also you know what happens to that population um over time and where people are going to be looking uh for housing and why we're seeing sort of a shift in that Dynamic and it's important because you know when you think about a region the size of the greater Golden Horseshoe about 10 million people 21,000 square kilometers give or take um you know there's a lot of different forces that play that sees people move even int regionally so say from you know the city of Toronto to another uh uh part of the greater Golden Horseshoe and and that's not something new um you know we've seen that for a long time as far back as my days at at cmhc and I know there's some past colleagues from cmhc on the on the call here today uh where you did see that sort of movement where you know initially newcomers May settle in the city of Toronto and immediate sound surrounding municipalities and then look elsewhere but I think what's notable um is over the last number of years we've seen sort of an uptick in that migration um to some of the outer line areas within the greater Golden Horseshoe and so we can kind of see that here so if we think about immigration both in sort of the preco period but then also in in the postco period the immigration pattern and where people choose to settle initially uh within the greater Golden Horseshoe have remained you know somewhat similar so this map is showing the pre-co period if we search for the postco period you hardly notice the difference um because in fact you know a lot of newcomers are choosing to settle the great majority um or majority at least within the the city of Toronto um and po region and just flipping back again pre-co postco that relationship really hasn't changed that much um what's interesting though is when we move Beyond just looking at immigration and start thinking about sort of net population growth um within the different parts of the of the greater Golden Horseshoe um that's when we start to see you know a shift that's really occurred and it's been well documented as I said in the media and in and in analysis and reports that we've seen over say the past year or so where in the preo period you know you're still seeing you know substantial net population growth whether you're talking about immigration people moving into the ggh from other parts Canada or or certainly moving around within the region itself um there was still sort of a focus um on those sort of core regions making up the GTA well that's changed as we moved you know out of the pandemic um where we're seeing you know more of a focus on the greater Golden Horseshoe in those surrounding regions um that that that uh that make up the the ggh versus the traditional City of Toronto uh po region and so what that means is that initially we're seeing people certain settle um within the central core of the greater Golden Horseshoe but then they're looking further field and how the housing market um has evolved over the last decade or two goes a long way to sort of explaining that int Regional movement especially you know from those core areas or traditional areas of of population growth in the GTA you know further field um throughout the rest of the ggh and so this chart kind of plots out uh trends for ggh uh uh home sales in a couple different ways um over the last couple of decades and certainly we can see you know we've had a couple of we've had some Peaks and valleys we've seen a couple of housing market Cycles um over that period of time certainly back 2016 2017 you know was sort of the prev previous record period of time and then looking obviously as we move through the pandemic and out of it um we saw another record year in terms of transactions uh back in in in 2021 obviously as we started to see the Bank of Canada hike borrowing costs in 2022 and and into 2023 that had a real marked impact um on the demand for ownership how is we see both um in the traditional GTA area um and then the outer line areas of the broader ggh we did see a a a downward Trend in in home sales and that makes sense obviously you know a real marked and accelerated um uptick and boring costs had an impact on the demand for ownership ship housing that had a impact on affordability if you look at the bottom panel though on this chart the other thing that we've seen over the last decade or so um is a growing share of transactions through treb's MLS system being accounted for by regions outside of the the traditional greater Toronto area um and again I think that just speaks to the trend we've seen in terms of you know inter Regional movement that as you know the housing market has become tighter as we've seen um U more of a a constrained Supply scenario um in the marketplace over the last decade to decade and a half you know we were seeing stronger upward pressure on pricing uh through 2021 and and the first quarter of 2022 and what that meant is that you know people wanted to move to the GTA and broader greater Golden Horseshoe uh to take advantage of the diversity of employment opportunities the cultural diversity that we've all taken advantage of um over the last couple of decades what they're finding is they obviously had to look further field to find housing um that that was affordable um and obviously as we move through the pandemic and we started to see more ability uh to to take advantage of work from home or hybrid work um obviously that even further perpetuated that ability for some households to move further a field to find the type of housing they needed um but but also be more affordable at the same time and so that goes along way to explain why you know we've seen that uptick um in in treb MLS system sales outside of the traditional city of Tonto and and even GTA area more in favor of that surrounding greater Golden Horseshoe and it makes sense um that that that people are are are are chasing that affordability at least to a certain degree by sort of Shifting the geography shifting area um of their of their home search and and more and more again as we've had ipsos undertake this polling we've really started to see you know housing and housing affordability as as a topic of concern um really sort of climb the list and so uh many of you may have seen presentations uh by Sean Simpson from IPOs but he always points out that you know first and foremost when you ask Canadians you know what's top of Mind especially as you go into an election you're thinking of public policy and and and and what people think uh other elected officials the policy makers should focus on Healthcare is always top of the list uh and remains top of the list now but a very close second and it's been climbing that ladder of of of policy concerns for for um you know average households across the country is housing um and if you look at the top four really on this list you know housing interest rates the economy you know those three they're all intertwined right because number one the great majority of people are purchasing a home uh through the use of a mortgage and so obviously interest rates and and and and how their relative level impacts people's monthly payments that's key um and then obviously number two you know interest rates aside you need to have a job you need to be able to gain and retain employment over the long term um in order to make those monthly mortgage payments and so it's no surprise then that housing in general and those sort of underlying drivers um are really top of mind for for people when you're asking them when you're getting a sense as to you know what consumers are feeling uh in the marketplace and so another question we ask people uh when we're undertaking this survey through through ipsos is are you intending on purchasing home over the next year or not and if they say no obviously we ask why um and and definitely over the last couple of years we've seen more people you know focusing in on on affordability quite simply they can't afford it they'll say something like it's too expensive to buy home interest rates are too high and you know through that same lens High borrowing cost you also start to think or people are thinking about more uncertainty um around the economy and we've heard you know more and more discussion about that over the last couple of months uh because there's this give and take of course so first we were asking ourselves well you know when is the Bank of Canada um sort of reaching the top in terms of uh in terms of interest rate hikes and then obviously what are they going to need to see um in order uh to see interest rate cuts and one of the things of course is is is looking at the labor market um where you know we're thinking about is the labor market slowing down are things not quite as tight as what they were in the past and so is that going to provide some relief on the on the wage growth front on the inflation front um and we're starting to see that but it's that give and take whereas on the one hand people want to see lower borrowing costs um but on the other hand obviously uh the high interest rate environment they're in right now is also um impacted uh uh the labor market and broader economy as well and so you know as we've seen that sort of drop off um in in sales activity that that temporary drop off in the demand uh for ownership housing largely as a result of of much higher borrowing costs today compared to what we saw uh back in 2021 in the first quarter of 2022 obviously the market has had to adjust and so we've entered into this period of time where you know sales are running about half of where we were say at the peak in in in 20 21 um yet listings remain quite high in fact we've seen an influx of inventory in some segments of the market um including the condo Market over the last year and a half or so and what that means is that for people who are active in the market today who are looking to uh make a a purchase a home purchase they're benefiting from a lot more choice and so at least temporarily gone to the days where you know we'd be seeing a number of different households compete comping uh um for for a given listing people have a lot more choice now so they know that in a given neighborhood if they can't get a deal done on house a they likely have house b or c um that's similar to what they're looking for as well um and so it gives them more negotiating power and as a result uh you know we saw a downward Trend um in pricing between 2022 and 2023 and even as we started to see the Bank of Canada cut uh uh their policy rate and we've seen uh um negotiated mortgage rates on the fixed side also start to Trend lower um we have continued to see you know prices remain somewhat flat um and off that q1 2022 uh Peak and that makes sense um because even as we start to see more demand in the marketplace as interest rates uh Trend even lower it's going to take some time to unwind or absorb um that that increased inventory um that we've seen in the marketplace uh build up in the marketplace over the last um 18 months or so and so there'll be a period of time at least where people are going to be able to benefit from not only lower boring costs but continued negotiating power because there's going to be a substantial amount of inventory in the marketplace and just to give a sense um as to you know the impact of you know the these interest rate cuts that we're expecting to see now flow through the end of 2024 and certainly through uh 2025 um as well and all I've done here is I've just said look at let's imagine that we're purchasing a home for a million dollars uh we got a 20% down payment 25 year advertis period uh and a five-year discounted variable rate mortgage right and so we see where we were at the leftand side of that chart before the Bank of Canada started cutting rates the blue bar is is where we are now so there's some savings there um but not a ton but obviously those savings start to ramp up you know by the end of this year if we continue to see cuts um you know we'll have carved off about you know $4500 off that off that average monthly payment by the end of next year potentially um you know we'll we'll have carved off the better part of you know $1,200 or so um off that off that monthly payment so that's starting to represent some substantial savings that households would be able to deploy for other goods and services that they need to purchase and when they start to have more of that flexibility you're going to see more you know would be home buyers that have been sitting on the sidelines over the last couple of years uh more interested in sort of moving back into the marketplace starting to look harder at making that home purchase over time and as I said at the same time they're going to be benefiting from you know substantial increase in inventory over the last year uh to 18 months or so especially within the traditional GTA whereas you know new listings Over the last year or so and this is new listings through July so we're kind of doing an apple Apple's uh comparison from a time frame standpoint um you know we haven't seen as much moving in new listings in that sort of surrounding or outer ring of the greater Golden Horseshoe but certainly in the GTA and particularly in that condominium apartment segment you know we are seeing a real increase um in inventory a real increase in new listings and that'll be important you know as we start thinking about an important cohort um of of of home ownership demand and that's that firsttime buyers category um but it's important to sort of think about you know what does this mean I mentioned earlier we had this sort of growing uh separation between the demand for ownership housing or sales of homes um versus new listings and so I want to plot that out um in a little bit more detail and so what I've done here is if you look at uh the top and bottom sort of uh panels here on this chart the top and the blue is the GTA uh and the Orange is just that that that that surrounding region that makes the rest of the greater Golden Horseshoe um and so the bars is just um annual change in in in in selling prices uh and the the line is the the sales to new listings ratio and so again this just another way of sort of looking at that relationship between demand and Supply um and so as that sales to new listings ratio trended lower um over the last couple of years a a lower trending or downward trending sales to new listings ratio just suggests that again buyers are benefiting um from more choice in the marketplace and that's when you start to be able to get more aggressive on your offers um and buy and large during that period of time you start to see a downward Trend in home prices as well and that's what we've seen um so again you know as buyers start to take advantage of lower borrowing costs over the next 18 months um they're also going to benefit at least initially um from an uptick in inventory as well and so as I said one of those buyer cohorts um that that will will start to be more and more of a driver of of home ownership demand moving forward is firsttime buyers and when we do the polling with ipsos at the end of each year we are asking you know are you planning on purchasing home over the next year and if so will it be your first home um and it was interesting like even at the end of of of 20203 it wasn't sort of the lowest share of intending buyers um you know that we'd seen you know since 2015 since we started doing this this this polling and so I think that was an anticipation of lower borrowing costs to come and So you you're still seeing a substantial number of would be firsttime buyers saying look at we're at least somewhat entertaining the purchase of a home over the next year and I think that share will increase further uh when we do the polling again at the end of 2024 um when when when when we're we're we're asking again if firsttime buyers are intending on purchasing in 2025 but by and large firsttime buyers are looking to see more relief on on the borrowing cost front um and so what we're asking is look at if you're renting right now um how much do you need to see interest rates fall before you're seriously going to consider U making the a purchase of a home and you know we've seen uh 50 basis points worth of cut so far in reality you know we need to see you know between 200 and 300 basis points for a lot of firsttime buyers to to move off the Sidelines and and and and look closely at at purchasing a home and so you know by and large we're going to really start to see an uptick um and demand at least from firsttime buyers uh more so as we move into 2025 and I'd even argue more so as we move into the spring and summer Market um within within 2025 versus say the first four or five months but this just kind of shows that there are a lot of people right now given High uh rents that we've experienced over the last uh couple of years in the in the GTA and surrounding GTH rental market um you know it goes to show that there are a lot of people right now that are saying look at if my rent even went up by a dollar I'd be seriously considering the purchase uh of a home like a condominium apartment because even if that monthly mortgage fee um may be higher um than what I'm paying right now for rent a lot of that even in this higher interest rate environment is immediately going to be going to principal so essentially I'm going to be investing in my house myself I'm going to be um you know building up Equity uh within a within a long-term investment and so again as we start to see more in the way of interest rate Cuts you're going to see a lot of these renters that feel they're paying you know a fairly high rent right now taking a closer and closer look um at that uh at that home purchase and that's really where I want to end off today before we move to the the question side and I did see some uh questions already starting to be uh typed in so that's great and happy to talk about you know different aspects of the market but I did want to touch on rental um you know oftentimes when we think about the the the Toronto Regional Real Estate board and and the statistics that were releasing on a monthly or quarterly basis um we're thinking about the the the home ownership Market but it's also important to note you know that we have tens of thousands of rental transactions reported through our system um as well um throughout throughout a given year and that's both on you know the single family side but even more so on that condominium apartment side that secondary rental market where we' seen investors purchase units over time and bring them to to to bear on the on the rental market and so certainly it makes sense that you know average rent growth on this chart has been you know in the high single digits to low double digits over the last number of years because you know but for um the the the the investor Health Supply coming onto the marketplace uh we really haven't seen a lot of youo new rental stock come online and so with the record levels of population growth that we've seen over the last number of years there's been real demand for for for rental accommodation and so it makes sense up until you know the second half of 2023 and moving into 2024 that we're seeing strong growth um in average rents now that's changed to a certain degree um we've actually seen um you know a little bit more Supply um in the rental market over the last few quarters where we've seen um the actual growth in rental listings outstrip uh um growth demand that's not to say the growth in rental transactions isn't there it is it's just that the number of listings available um is is growing at a at a faster annual rate and so that's benefited renters um at least to a to a certain degree where you know we're seeing double digit or high single digigit uh growth in average rents last year and now we've actually seen a bit of a decline year-over-year over the past couple of quarters so a little bit more negotiating power um for renters in in in in that in that space as well to condo apartment space and that's great um and you can see that here if you look at average rents just as sort of a Time series we have seen a bit of a dip um as we moved into 2024 um but certainly um still high from an historic perspective and I'd argue sort of thinking back to that those polling results that we saw um from the end of 2023 there's still a good number of households that are really starting to weigh more that that uh uh option of say moving out of rental housing and in into home ownership and I think that decision um is even going to be come more to the Forefront um as we move through 2025 and start to benefit from a lower boring costs and B a substantial amount of standing inventory especially in that condo segment um over the next year or so and of course just sort of thinking you know finally about demand for rental accommodation it's not just been on the back of um of of of permanent migrants moving into the GTA and surrounding greater Golden Horseshoe um but also non-permanent migration so people moving into the GTA and greater Golden Horseshoe uh to take advantage of educational opportunities temporary work opportunities or what have you and obviously you know the great majority of these households are going to be more focused on that rental market um versus home ownership and so even as we start to see you know renters right now start to move more so into home ownership over the next couple of years taking advantage of lower borrowing costs it's not to say that all of a sudden there's uh um going to be much more balanc in the uh in in the rental market because we're still going to be seeing a record levels of immigration a lot of these households initially choose to rent and B we're continuing to see very high levels of of non-permanent migration um focusing on the rental market um as well so just sort of a final point and this impacts both the demand for um both ownership and Rental housing we're kind of at that precipice right now where we're sort of balancing you know where we are in terms of boring costs and inflation um versus how um that monetary policy has impacted um the the labor market and and brought our economy over the last year or so and and while you know the unemployment rate remains U low from an historic perspective or certainly now in line with historic averages we have seen an uptick we have we are seeing a little bit more softness in the labor market a little bit more softness in the in the overarching economy and so that'll be the balance over the next uh over the next say 18 months or so um so while we're starting to benefit from a lower boring cost is that going to sort of feed through um into sort of a flatlining in that unemployment rate even seeing it start to to Trend lower which obviously would feed into more consumer confidence when people are thinking about uh purchasing a home and making those mortgage payments over a long term and so more and more over the next uh number of months it's going to be important to look at that relationship between borrowing costs how it's affecting the economy and how that's feeding through into the labor market because as I mentioned at the outset of the presentation you really need to see um you know balance there for sort of a sustained growth in the in the ownership Market you need people confident in their ability to to gain and retain employment over the long term to make those mortgage payments and at the same time you need to see interest rates at a reasonable level so people can can afford those payments especially in the expensive market like GTA and even more so or growing in the in the surrounding greater Golden Horseshoe as well so I'll turn it back to Carly um and and certainly I'm happy to answer questions um I guess to the bottom of the hour awesome thank you so much Jason uh we do have a few questions so uh from what I can see I there was a there was a question in regards to the 2024 bar chart bar chart um and it says so the 2024 bar chart was Data till July that was for listing so what I did um just so we could have a um an Apples to Apples comparison but still looking at on an annual basis I just looked at new listings from January uh to July um across that time frame perfect okay yeah perfect and just as just as a point too like if people are looking to you know access you know reports on the housing market um if you go to t.ca tr b.ca um you know we have reports going back to the mid 90s in terms of you know Trends and that that we've seen in the greater Toronto area um over that period of time and you know you can download those reports and what have you perfect okay thank you um the next one we have is what do you suppose the long-term impact of Mark Miller's changes to immigration will be on the housing market well I mean right now I mean we we're really sort of you know having it's a balancing act and then certainly uh from a public policy perspective I mean we're we're we're having the the debate along the lines of you know on the one hand you know growth and economic development um certainly in Canada and builtup regions like the GTA is driven to a great degree um by population growth um but at the same time you got to have a place for for people to live uh and we're struggling um on that on that second point and and have struggled um over the last number of years and I caution you know I I spoke a lot during the presentation uh about the fact that right now we're benefiting from you know quite a bit of standing inventory especially if you look at that condominium apartment Market um but as the housing market starts to pick up as we start to see more demand for ownership housing we're eventually going to eat into that inventory and if we're not replacing it um through new home completions over that same period of time um then we're going to start to see the market tighten we're going to start see the impact of of of population growth in terms of more and more competition for given listings in the market and that leads to Upward pressure on on pricing and certainly over time I mean we should expect to see um the price of homes growing you know in sort of the mid single digits um that makes sense but the issue is that we've been kind of working through these sort of Cycles where you know we see a real acceleration in price growth you know well into the double digits um because you know we we haven't seen sort of a sustained pipeline of housing Supply come online over the last couple of decades and it it's more than just needing to see um more housing in the aggregate um it's also needing to see a greater diversity of Home types come online see over the next decade that sort of bridge that um you know that that that traditional single family home versus you know condominium apartment space you know more plexus more you know stacked towns um that type of thing that allow people sort of move up and you know eventually down the housing Continuum to you know always have the type of housing that um that meets their needs and so on the one hand we have uh um you know policy around immigration that's seen record or near record levels of of population growth um but on the other hand we we really need to see you know a lot of the good policy work that's been done around housing Supply really start translating into more shovels in the ground as we move through 2025 and Beyond excellent thank you um so I have three questions that pertain to the condo market so um and they kind of overlap each other um so I'll just I'll I'll I'll say all three of them and then hopefully we can uh we can get some answers uh to answer all of the questions so that sounds good so although the condo Market is currently better supplied yeah but we know that population continues to increase how do you see population growth specifically impacting the GTA condo Market that's one yeah um also to add to that can you make some specific comments on the condo Market about inventory how you see see things going for the next couple of years and the last piece of this question is um is there a pricing and sales difference between General condo market and luxury condos yeah so I I I think that you know a as the basis of our population growth um uh is is immigration and initially you know a lot of these these new households are are are choosing to rent and a lot of them as we saw from the map you know within the city Toronto um and Peele region um so in so far as those people would be looking to move into the home ownership Market out of rental um it would make sense then that that you know they'd be focused on the the condom apartment Market um at least initially I mean that is the entry point for a lot of firsttime buyers and so it's true right now there's a ton of inventory we've seen investors um you know choose to to list their units for sale um in in in greater numbers um and I think you know as we start to see the market tighten up a little bit you may see even more listings um because people will be looking to take advantage of of uh um you know some initial you know price bumps as well and and but what that'll mean um is that you know we're going to see uh a combination of lower borrowing costs and and fairly high inventory at least in over the next 18 months or so and so people will be able to um you know relatively speaking take advantage of of prices that that remain below what we saw you know say in 2021 in the first part of of of 2022 my concern though and this gets to this the the second two parts of the question is that you know we haven't seen a ton of new home sales or pre-construction sales and this has been well documented as well um certainly if you're reading the the media as it pertains to the housing market is is you know there there's not a lot of pre-construction sales activity right now and that's really sort of the start of the pipeline um and so you know historically what you needed to see was relatively tight conditions in the resale market for Condominium Apartments to start to drive people um into into uh preconstruction sales centers and we're not seeing that right now so the problem is is that starts to lead to a delay um in new projects starting and you're talking about you know somewhere in between you know it can take between five and 10 years for a project to go from a a preconstruction sales state to you know keys in hand um and so you know we're going to need to see also an uptick in pre-construction sales to make sure that we're starting to see more inventory come online and and and there in lies sort of the the rub here that on the one hand we're seeing very strong population growth which we need for the economic development of our region of the country um but by the same token you know it's a struggle um to bring online new housing whether we're talking about Condominium Apartments um or or single family homes um or or anything in between and and my fear is is that you know if if more and more people who are looking to move to Canada um from other parts of the world say look at we'd love to move to Canada and specifically the greater Golden Horseshoe um but we're not confident we're going to be able to find affordable housing whether that be in the ownership Market or rental market they're going to start to look elsewhere and that elsewhere may not be in Canada it could be you know in other parts of North America the United States or other parts of the world and the problem is is that once you start to lose that inflow um to other parts of the world it's tough to get it back uh and so again I mean credit where credits due the federal the provincial and local governments have have really committed um you know to making policy changes that would uh hopefully bring online more housing um but you know we need to start to see more shovels in the ground uh and I think you know you'll start to see more interests in the new Home Market as resale market conditions tighten up but you know we're probably looking towards the end of 2025 and 2026 before we start to see that you know translate more So Into You know people taking closer look at at pre-construction sales centers and what have you especially um in that condo space where there is a lot of inventory right

now excellent um and also story did did uh just touch on like the pricing and sales difference between General condo market and luxury condos yeah I mean the luxury space is a little bit more you know Niche if you're talking about both in in sort of luxury locations but then also um you know sort of larger units um I I I I think it's almost sometimes sort of you know very sort of microloc dependent or even project dependent when you're thinking about sort of uh uh the the demand Supply sort of dichotomy or relationship for that uh type of unit um I think the other thing that's important to recognize as well is even if you have larger units you know 1500 2,000 square feet um which are found more often in these sort of larger uh uh you know luxury type uh developments there is sort of a a difference in terms of the priceing on a per square footage basis between say a traditional single family home uh and a newer uh um you know concrete midrise or or or highrise they it's expensive to build concrete it's expensive to build units of that size and so you know people that are thinking about say selling um their existing single family home maybe more aged households and into sort of a quote unquote you know luxury um or above average condo apartment they'll see that there's not that much Gap there and maybe you're not putting as much in your pocket in terms of you know parlaying Equity that built up in your single family home um and moving into that luxury space and so you know it does prompt that sort of decision making process and and you know maybe just sort of moving off you know luxury and just thinking about large condomin Apartments there's often this complaint um that you know it's difficult to find large family siiz units well part of the reason is is that again you know they're quite expensive if you look at it on a per square foot basis and so you know in a new concrete highrise see 1500 2,000 square feet you know that's cost prohibitive for a lot of families and indeed is in line with you know what they might pay for a town home or semi especially when you start to um when you start to build in you know monthly maintenance fees and what have you excellent thank you so much for that um I think right now I have two more questions um it says uh you spoke about a growing shift towards municipality surrounding the GTA proper proper in recent years do you foresee a scenario where we would see Resurgence in the city of Toronto and other traditional GTA municipalities yeah I think a it's a really good question it's interesting um you know taking through the lens of the pandemic and and sort of changes of uh live work relationships that we've seen over uh well let's say since uh since 2020 um because obviously um the lines are a little bit more blurred around sort of living close to where you work and commuting times um and what have you and so you know I I I do think that you know if you think of the traditional downtown core like in the city of Toronto and other sort of say higher density nodes that can region and and York Region I I I still think that people do see the advant Vantage of of sort of living in those areas to you know be closer to work or take advantage of um you know the various you know public opportunities Parks shopping what have you uh that exist um but I think you know in terms of whether you see more of a Resurgence in the downtown I think also depends on what we see um on the commercial side of the market um so you know right now um you know what what is going to happen in terms of the demand for office space and use of of what we call I guess traditional office space um what's going to happen in terms of the retail environment in terms of people you know you know visiting bricks and mortar shots versus um you know buying online and and so you know people have a lot more options now um and I think that dictates you know whether or not they need to be in sort of traditional cores or not and I think that's you know one factor that you know thinking about that movement and and seeing a higher share of transactions outside of the traditional GTA proper um I think you know there's more and more people that are comfortable now living a little bit further field than they otherwise would

have um okay so I have actually a few more questions have popped in uh this is uh more so I mean it's it's been definitely something that's been spoken about in uh in the media and talking about the like the housing shortage and crisis um the colleges have been significantly impacted due to the housing crisis and they wanted how this could ever be res be ever sorry could ever be solved do you have any thoughts on that yeah I assume that s just speaking to um you know people looking to you know come to the greater Golden Horseshoe and take advantage of postsecondary Education opportunities yet they need to find um a place to live um and and and you know part of that sort of non-permanent migration Spike that we've seen over the last number of years years um you know some of that has been students people looking to to come here and study and and you know I fully understand uh the comment uh because if you're if you're talking about you know extremely tight rental market conditions that we've seen for the better part of the last couple of years as I said we've seen a little bit of relief um over the last uh over the last few months over the last few quarters but still you know rents are quite High um and and so you know it's it's not unlike my comment that I made earlier um around you know there's a lot of people all around the world that want to move to the greater Golden Horseshoe to take advantage of all the the job and cultural opportunities that exist same thing goes for Education we've got a lot of great education opportunities here um in the in the greater Golden Horseshoe as well but if you can't move here temporarily to take advantage of that education because housing is too expensive well again you're going to start to look elsewhere and and again it gets back to Economic Development because you know wouldn't we like to see a SC area where you know people could come here initially temporarily they take advantage of the great education that we offer through various you know channels or or Pathways as it were and then a lot of those people stay here um and are making a contribution to the uh um you know the economy on a longer term or or permanent basis um and so yeah like the the availability of Housing and the affordability of housing is sort of intertwined in in uh on the educational side as well absolutely um question about the rent increase tolerance slide yeah um this person says I would imagine that a renter's ability to put together a down payment would have a major if not larger impact on their decision to purchase than whether their monthly mortgage cost is comparable to renting was that factor captured in the survey yeah I I I I think that it is especially when you look at um you know if you look at a combination of of answers that we saw um through the survey so you know on the one hand people there's a lot of people thinking you know what I'm paying a lot of rent here um and and it's starting to get close to what I'd be paying um for a a mortgage payment for say a condominium apartment um especially when you take into consideration that a lot of that's pointed towards uh principal pay down um over time so so growth and Equity but by the same token you know people that have been renting um and haven't Tak advantage of of you know increasing home equity are also much more sensitive uh to to to borrowing costs and that's why when you ask first-time buyers well you know how much are they going to need to see um in terms of of of of interest rate reductions before they seriously consider moving into the market you know the the most common answers were between 200 and 300 basis points and so I think that gets back to the point that you know because they don't have as much of a down payment because they'd be utilizing um more leverage um obviously they're they're then more impacted by the the level of boring cost and how that feeds through into their monthly payment thank you so much for that uh we've got two more questions here um will there be investors who are basically stranded in this highin market for example buying an investment property less than 400 square foot condo at preconstruction or Peak 2022 price and and able to rent out at a market price that breaks even for the investor do rates need to go back to all-time lows to justify their investments will we scare away this source of Rental Supply for a good generation yeah I mean if you think about the rental market it's a really good point especially like the the last piece about Rental Supply because you know and and we have seen more purpose built rental construction um and completions over the last couple of years and that's great uh but it pales in comparison um to the amount of inventory that's been added over the last decade on the back of individual investors um you know and and but unfortunately you know as has become more and more expensive to carry this investment this is even before um you know we start to see um the the the the upward Trend in boring costs over the last couple of years just with sort of the the the price growth scenario that we're seeing um you know it was getting tougher and tougher to sort of carry that investment um on rent alone right and cover you know the the property taxes and and and maintenance fees on top of that uh on top of that mortgage payment and so we were starting to see a decline um into the number of units from one year to the next um that were being added to the quote unquote rental stock that secondary rental stock on the back of investors and it's a flexible stock right it's not like you're building a rental apartment and then forever and ever that's a a purpose belt rental um you know uh investor held units in the secondary Market can move in and out um of that rental space and I think right now um you're starting to well you're not starting to see you are seeing more of an outflow and so it's a bit of a double whammy uh in in the in the sense that you're seeing an outflow of investors and that's based on you know higher levels of inventory in the in the resale market right now and on top of that you're not seeing a lot of activity at the pre-construction sales Center and so you know I think in the absence of a real uptick in purpose belt rental construction we are going to see a bit of a dip um in terms of you know additions to the rental stock and the GTA and so you know while right now the rental market is relatively well supplied not unlike the ownership Market um you are going to start to see that inventory get absorbed if we continue to see population growth at the record or near record levels that it is right now awesome thank you so much Jason um I just have three more questions here and then we'll have to uh we'll have to end this around 12:30 okay um the question here is says it seems that affordability is the main problem and that has not been addressed yet in terms of supply of affordable non-luxury Apartments any thoughts on

this yeah I mean it's uh you know even even though we've seen um you know prices Trend lower um you know to a certain degree helping to mitigate the impact of high borrowing costs they certainly haven't you know dropped off enough where you know if we're looking at it on a on a monthly payment perspective um you know that it's uh um you know that that it's manageable um and so again it gets back to you know how sensitive firsttime buyers are uh to borrowing costs and why a lot of them are saying you know I need to see 200 300 basis points and in interest rate reduction to make this move affordable even given the fact that we've seen you know a drop off in in in in average prices compared to what we were seeing say in the first quarter of 2022 just the price growth or price decline on its own wasn't enough to mitigate that impact of boring costs uh and so that's why you know I'd be expecting to see you know more in terms of of growth in demand especially on the firsttime buyer front um as we move into the second half of 2025 you know as we're getting closer to that sort of 200 basis point mark um in terms of interest rate

reductions thank you um do the statistics shown for immigration include nonpermanent residents not the way I showed them here so I basically broke it and you know if you go to the statscan website um and uh um and look at the components of population growth which is a series they have available for for for different regions across the country um you know they have they have immigration you can net out people leaving the country as well to get sort of a net immigration number uh and then they have a separate uh net non-permanent migration uh number as well and so you're able to see the different components you're also able to see you know what's going on with people you know moving around the country so people say moving from uh um you know the province of Ontario to other provinces you're also able to look at that intra Regional migration so people moving from say the city of Toronto to PO region or Niagara or wherever the case may be okay are we seeing an increase in foreclosures in 2024 compared uh year-to date compared to last year I certainly if you look I mean one measure that that people often point to um when when thinking about um you know stress on sort of the the the mortgage Market um is looking at the the percentage of mortgages in AAR more than 90 days and and while we've seen a we have seen an uptick um in that number and it makes sense in a in a higher interest rate environment um it Still Remains relatively low um from an historic perspective and you know so obviously the hope then is um is that as we start to see you know interest rate reductions come online or roll on over the next you know 18 months or so um that that would help sort of mitigate that uh that that share getting getting higher um because you you know people's payments would become more manageable whether they're they're in a scenario where um they're they're in a variable rate mortgage and they had say a payment reset or what have you or whether they're on a fixed mortgage and they're coming up for a renewal um then hopefully those payments would be more manageable by the time they hit that renewal period because we will be seeing rates Trend lower but um they're not trending back to you know 2021 levels um and so people you know are going to need to account for um you know a higher interest rate um environment um you know it one sort of Silver Lining I guess is that we have seen a relatively tight labor market um over the the the same period of time albeit the unemployment rate is rising and so a lot of households happen to take advantage of uh you know wage and salary increase that at least helps mitigate the impact of higher boring costs but you know it remains to be seen but but certainly you know even with the cuts to interest rates that we should we should expect to see through 2025 um you know uh the the principal interest payments associated with an average mortgage are going to be certainly higher um than than what people are used to say in 2021 in the first part of 2022 perfect okay um right now this seems to be the last question unless something comes in but um luxury is a subjective marketing term not sure how we could capture that in staff as you noted even large condos are more appropriately considered Family Apartments not luxury they wonder if Jason has any data on how much location versus size age amenities Etc Drive

prices in terms of you know the share of prices or or Price growth from one or the other um I don't off to talk my head um I mean you know we do for example have the the home price index for most major markets across the country um and it it provides an interesting take on on home prices because it's looking at sort of what a a benchmark home is um and give you give a neighborhoods throughout a region like the GTA um or greater Golden Horseshoe uh and so you know it does capture it captures location it cap capes sort of what a typical home or typical apartment condo apartment may look like in a in a given area um there does of course tend to be a correlation between sort of location and income and the types of homes that um are are are built and and purchased from one neighborhood to the next as as well and so um you know there's an inter relationship there as well excellent uh that's it I don't have any other questions I'm not too sure if uh if anyone else has anything that they want to uh ask Jason but um in the meantime though if someone does have a question would it be okay if they reach out to you yeah absolutely I'm always happy to to take questions and discuss the market it's important because um you know it's important to understand what's going on at at sort of ground level and what different stakeholders in the marketplace have to see and look at I really appreciate today I mean sometimes you do these presentations and talk for 20 minutes or a half hour and you know it's Cricket so uh it was a it was a lively crowd today with lots of good questions and so you know I appreciate everyone taking the time to you know make this uh uh more of a back and forth that's perfect thank you so much Jason and since there are no more uh uh questions Jason I'd like to thank you so much for taking time out of uh out of your day to discuss such a Hot Topic obviously in the Toronto region um just obviously from the amount of questions we did receive and the number of individuals that are on this call there's a lot of interest to you know hear from an expert like to yourself um you know just about what's going on in the Toronto region so thank you so much for that and um this um I did see just a note here uh this has been recorded So once we um get off the call here our Comm team will be uploading this to our uh the Toronto region board's uh YouTube page so um we will send out an email to everyone and just let you know that the link is live for those who uh wish to either share it or rewatch it and get uh maybe some more details that uh that we missed today but um other than that I I just want to thank everyone so much for taking time out of your day and I hope everyone has a wonderful rest of your afternoon and um thank you so much for participating thanks everyone thank you so much bye bye bye