20 September

How Immigrants Impact the Toronto Real Estate Market

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For the last few years, Canada has made headlines for promoting an extremely inclusive immigration agenda. In fact, since 2019 the government has resettled more refugees than any other country.1 But immigration policies have recently come under fire from Toronto residents who are already tired trying to navigate tough real estate market.

Inventory is low and home prices are high, both of which continue to be a concern amongst residents of the Greater Toronto Area of whom already holds the largest population of immigrants in the country compared to all other major metropolises.

 

Rising Need For Affordable Housing

The Canada Mortgage and Housing Corporation (CMHC) cites that nearly 22 million homes need to be injected into the housing market in order to increase supply and improve affordability by 2030.2 Similarly, as more immigrants pour into areas like Toronto, the need for more affordable housing becomes even greater.

The government already expects a shortfall of roughly 3.5 million homes, especially in high concentrated areas like Toronto, which means its not likely real estate will become more affordable by the 2030 target date.2

Residents are already feeling the weight of Canada’s anemic supply of affordable homes, many experts think liberal immigration policies are only encumbering a recovery to more normalized market conditions. While ramping up building capacity is crucial, it may not be feasible considering the constant growing demand for affordable homes.

 

Benefits of Immigration for the Toronto Real Estate Market

Despite the short-term stress immigration may be causing the Toronto real estate market, many key economists feel optimistic that immigration could be the key to the affordability crisis, not only for Toronto but the entire country.3

Recent data shows some evidence that the forecasted housing shortfall can be most attributed to rising inflation and higher construction prices, not simply a rapid rise in population due to immigration. Key experts also note that there has been a lack of affordable housing across Canada for nearly two decades, while major immigration reform has been relatively recent. A shortage of affordable homes isn’t anything new.

Many organizations feel that accepting more immigrants can have the opposite affect on the housing market by infusing the labor force with a greater supply of skilled workers. In fact, a recent survey from Environics Institute for Survey Research found that 85% of Canadian respondents thought immigration has a positive impact on the economy.1

More skilled workers could help lower vacancies in the construction industry, improve employee turnover, and help reduce input costs associated with building, which in turn could help increase inventory.

 

Summary

The impact immigration has on the Toronto real estate market is certainly something up for debate. On one hand it seems clear that immigration is putting a prolific amount of additional stress on the Toronto housing market, helping keep demand high and supply low. On the other hand, accepting new immigrants could help increase the population of skilled workers, driving builder capacity and output.

Whether you are a new or seasoned homebuyer that in favor or opposed to immigration reform, its pretty evident that there will still be a shortfall in affordable housing in the Greater Toronto Area for the time being.

 

 

Sources

1 https://foreignpolicy.com/2023/08/28/canada-immigration-trudeau-policy-multiculturalism-backlash/#:~:text=Since%202019%2C%20the%20Canadian%20government,is%20a%20bastion%20of%20multiculturalism.

2  https://www.gta-homes.com/real-estate-info/the-impact-of-immigration-on-the-housing-market/

3 https://www.cicnews.com/2023/08/is-immigration-causing-canadas-housing-crisis-0838904.html#gs.4p01yj

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