Canadian real estate, particularly in its cultural epicentre – Toronto, is assuredly influenced by larger social and economic trends. A complex market in its own right, the landscape of real estate in Ontario’s capital is constantly subject to evolution on both micro and macro scales.

Narrowing the scope of this dynamic, real estate ownership as an avenue of investment has long been considered a wide venture. However, in light of progressing economic realities, new considerations have emerged. Some of these trends pose an advantageous degree of opportunity for real estate investors in Toronto, while others may present unique considerations for investors to be aware of.

In this article, we will analyze how economic trends influence real estate investment and what contemporary investors should understand when navigating the present market.

Fluctuations to Interest Rates

Since the early months of the current decade, ongoing changes to the Bank of Canada’s Target Rate have triggered impactful fluctuations in interest rates across the country.

Initially, historically low interest rates spurred a drastic increase in market activity, with innumerable buyers entering the market in search of a new home. This sudden surge in demand contributed to an unprecedented escalation of housing prices with competitive bidding wars becoming status quo. In the following months, Toronto real estate continuously broke records with sellers celebrating high returns.

This upswing, however, would not prove permanent. Approximately two years following the initial plummet in Canadian interest rates, the Bank of Canada would reverse this phenomenon, steadily hiking its Target Rate to curb concerns related to inflation. Suddenly, the increasing costs of interest paired with summited real estate prices drastically limited buyer eligibility across the city, marking an abrupt shift in market dynamics.

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Impact of Lesser Eligibility

This change proved restrictive for many would-be home buyers as a multitude of residents who were previously capable of purchasing real estate were now forced to rely on rental housing. This trend drastically elevated the demand for rental housing in Toronto – a market already synonymous with high demand.

The outcome of these conditions has proven lucrative for owners of investment properties. Across the past twenty-four months, rental rates citywide have escalated exponentially notably outpacing even the rate of inflation. Today, Toronto landlords are earning unprecedented returns as a result of this growing demand for non-permanent housing.

Strains on Supply

The dynamics of Toronto’s rental landscape are further influenced by economic trends in form of challenges relating to supply. In recent years, numerous developers (with the guiding incentivzation of the municipal and provincial governments) have plotted and broken ground on large scale housing projects across the city. The intention of these new developments is to increase the overall supply of rental housing and in turn, curb or balance the record-breaking rental rates brought on by the market.

That said, a substantial volume of these developments have been impacted by broader economic trends such as inflation, supply chain delays, rising labour costs, and of course, increased inflation rates. This has resulted in lengthy disruptions to some developments, ultimately prolonging contemporary market circumstances.

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Armin Group’s Specialized Investor Support

If you are seeking a seamless and lucrative investment in Toronto real estate, it is essential to begin your journey with the assistance of a knowledgeable industry professional. Leveraging our direct expertise in Toronto’s active rental landscape, Armin Group’s strategic insights provide you with unparalleled guidance as you source and purchase an investment property.

As your personal consultants and real estate resource, our dynamic guidance exceeds the transaction. Should you require assistance in assessing your finances, sourcing or screening tenants, ROI-adding property upgrades, or beyond, Armin Group’s white-glove investor services allow you to navigate Toronto’s complex market with confidence.

Seeking sophisticated real estate guidance? Armin Group can help. Send us an email or call our team at 416-347-4061 to begin your journey.