I was just asked an interesting question: is the Toronto market in 2019 like 1989?


But I thought the answers I gave might be of general interest, and worth repeating.

LEVERAGE: “Buyers” in 1989 were buying with little oversight, with miniscule deposits of $500 to $1000. with further deposits far in the future, and with no understanding or thought of closing to re-sell or rent. They were unqualified and leveraged, not to the hilt, but far beyond the hilt. Today’s buyers, with typically 20% cash deposits, with mortgage approvals in place before the 10 day recission period has passed, are a different breed. Does it leave a lot of marginal people who would like to be buyers on the sidelines? Sure. But marginal buyers without the means to complete their transaction do not contribute positively to a healthy balanced marketplace.

DEMAND: Population growth leads to rental demand and purchaser demand. With vacancy rates at historic lows, tenants are willing to pay premium rents for brand new condominiums. With the majority of end-users unwilling to gamble their lives on predicted delivery dates, brand new never-lived-in condos, originally bought at pre-sale by investors, are eagerly anticipated opportunity by end-users when they come on the market, and those end-users are prepared to pay a premium for the certainty of seeing finished product with a guaranteed delivery date.

SOCIAL SHIFTS: Toronto is dramatically different from the Toronto of 30 years ago. Condominiums are the dominant form of housing. Living downtown is not a novelty for trendy urbanites and bohemians, but a mainstream option, so much so that Coca Cola is just one of a number of companies choosing to relocate downtown because that’s where their employee talent pool is, highlighting the other trend: people want to live and work and play downtown. Commuting has become anathema, so much so that one Toronto survey recently reported that fully 40% of Torontonians walk to work: there’s a sea change. And as with everything, the bigger the downtown population, the more there is for them to do, accelerating the urbanizing trend.

That’s what my 10,000 hours tell me.

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