A Quick Look At The Great Toronto Exodus
Having lived in Toronto my entire adult life, I’ve habited nearly every property type available (in order): low-rise apartment rental, duplex rental, high-rise condo rental, basement rental, low-rise condo rental, quadplex rental, detached single family home ownership, mid-rise condo ownership and finally semi-detached duplex rental. I fully understand the benefits and detractions of leasing versus ownership, but that is another topic on its own.
There have been many blogs and articles hyping up the migration of Torontonians to greener (with more square footage) pastures. I’ve even had a couple of friends pack up and head way north of the city. Although there is plenty of anecdotal evidence of these migrations, I wanted to take a closer look at the data and see who exactly is jumping ship and whether Toronto will soon resemble a ghost town.
From the Toronto Regional Real Estate Board, I gathered home sales from all property types spanning January to December 2020. This allows us to see sales, prices and new listings across different real estate zoning districts for the entire year of 2020. From this data, I calculated the sales-to-new-listings ratio, giving an idea of how balanced a market is (buyer’s market versus seller’s market). The majority of these districts sit above 50 per cent (seller’s market) meaning as houses go on sale, they are very quickly snatched up.
Although not an exact science (since re-listing a property counts as a new listing) the sales-to-new-listings ratio provides a consistent comparison between neighbourhoods. I selected the bottom four districts to dive deeper into, as properties in these areas had less demand compared to the other neighbourhoods in the city. Or from another perspective, these areas were more desperate to sell (and possibly migrate) than the other districts. The C01, C02 and C08 areas are the main cluster making up the heart of downtown Toronto. The C12 section is where Drake lives.
So if the people migrating are concentrated in the downtown core, I wanted to look more closely at the demographic data in these neighbourhoods and see if there was an explanation to why people are leaving. Since this is a census year, the most recent demographic data I could pull from was 2016 through the Toronto Open Data Portal.
Filtering the population data by dwelling type yields a much greater concentration of people living in apartments within a building, whether those are owned or rented is not specified. High-rise buildings by nature are much more densely populated which could answer why these numbers are so high, but the most populated community (C01 - Waterfront Communities) is also dense with the sheer number of high-rise buildings.
If we assume that the migration of people out of Toronto is real, it appears that those most desperate to get out are the ones living in tiny boxes in the sky. The data should show that condo sales in C01 are more significant than 2019 due to lockdowns driving people to larger spaces, and not leaving the city due to run-of-the-mill overpriced real estate conditions.
Having a look at C01, new listings began spiking in June and remained elevated for the rest of the year. So far, it seems that a couple of months of lockdown had condo owners feeling tight in their spaces.
However, when it comes to the actual number of units sold, things remained steady throughout the year aside from the first couple months pre-lockdown. During this period, real estate showings or any human-to-human contact was limited which explains the sudden dip during a seasonally strong period.
Due to the combination of new listings in the summer of 2020 as well as the drop in sales at the beginning of the pandemic, the sales-to-new-listings ratio dropped for most of the year. This helps explain why the aggregate 2020 sales-to-new-listings ratio was low, but it failed to highlight the strong bounce back in December.
The narrative continues that people are frantically leaving Toronto, but before the sensationalist headlines have you worried about being the last one standing in a post-apocalyptic wasteland, the actual numbers are far from conclusive. The area of Toronto with the most desperate sellers are also home to the most densely populated high-rises in the city. Although it is difficult to ascertain whether these home sales were from investment properties, condo owners moving to the suburbs, or a combination of both, rent prices continue to drop in the downtown core. This seems to indicate that investment properties likely do make up a sizeable portion of the action.
Actually, this might be a great time to move back into the city.
