Item — HN Reader

I think you nailed it.

1. On top of that, there is also the fact that 100K new ppl move into the GTA every year. A good chunk of the wants to live in DT Toronto, further reducing the small supply;

2. Toronto produces 30% of Canada's economic output;

3. By many metrics, Toronto is extremely underpriced for the job and quality of life you get compared to other countries' largest cities;

4. Toronto is the 3rd largest North American city;

5. It's possible part of the prices are just tracking the USD as the CAD dropped ;and

6. The truth is, the majority of the Canadian population won't know/accept that in this single city people make 5-10x the income they make, hence "bubble" being thrown around as the obvious answer.

4 comments

Toronto has been the economic and immigration centre of Canada for 20 years. Why has there suddenly been an inflection point in the rate of price growth in the last 2-3 years? [1] What about Toronto's economic fundamentals (i.e. the capacity of Torontonians to pay for housing) has changed in that period?

Don't get me wrong, there are definitely organic factors that contribute to the price growth in Toronto. But those cannot account for >15% year-over-year growth.

[1] http://www.torontohomes-for-sale.com/4a_custpage_2578.html

I think point 5 is likely important to recognize. The CAD to USD ratio has dropped dramatically (Currently 1 USD = 1.33 CAD). If you picked the exchange from 5 years ago you see it was 1 USD = 1 CAD, if you do 10 years it was 1 USD = 1.07 CAD.

I'd argue that at least 20% of the price increase we're dealing with today is related to inflation.

Then how come there isn't a 20% increase in cities like Québec, Montréal, Calgary or Winnipeg?

Have you visited those cities? I don't find it surprising at all.

Quebec / Montreal: historical politics pushed investment to toronto when separation was on the table and pushed by certain political groups (again bumping toronto prices and not helping those areas at all!)

Winnipeg / Calgary: isolation from other large cities, colder climate, less immigration friendly.

>Winnipeg / Calgary: isolation from other large cities, colder climate, less immigration friendly.

Isn't Manitoba one of the easiest provinces to immigrate to?

"A good chunk of the wants to live in DT Toronto, further reducing the small supply"

Toronto's population grew by 10% between 2001 and 2016. https://en.wikipedia.org/wiki/Demographics_of_Toronto#Popula...

There is currently a vast supply of condos in the city, and considering the average number of children per household (1.1 in 2011), the supply should cover the housing demand in the city.

Things are a little different in the GTA, but this still doesn't explain the magnitude of the jump in prices in the last two months.

> Toronto produces 30% of Canada's economic output

Out of interest, who tracks economic output? It seems Statscan does not. Although it is worth mentioning that Toronto CMA is home to around 18% of the population, and represents about the same percentage of the nation's GDP.

"4. Toronto is the 3rd largest North American city;"

Not quite, that's only technically correct, due to the fact that major urban areas in the US don't 'incorporate' into major cities.

It's better to compare 'greater urban areas' with other regions. On that basis, it's not so big.

LA, Chicago, Dallas Ft/Worth, NYC all bigger, with Boston, Houston, Bay Area, DC, Seattle, (even Atlanta) about the same size. There's a few more on that list.

America is very populous and just outside many urban centres are vastly populated areas of slightly less density. Esp. in the North East.