While the relentless pandemic continues to wreak havoc on of Toronto’s economy, it’s had an interesting impact on the city’s real estate market – to say the least. The price of Toronto’s ground-related single-family homes has dramatically made headlines, as it continues to smash records for both sales and transactions. Meanwhile, the city’s condo market hasn’t seen the same fate, as the pandemic has resulted in an abundance of supply in the lonely downtown core and, subsequently, lower prices.
Of course, this isn’t a bad thing for those entering the market for a Toronto condo – and historic-low interest rates don’t hurt either.
What Neighbourhoods are Yielding the Best ROI?
A new analysis from real estate analysis firm Strata offers some insight for condo seekers when it comes to Toronto’s most investment-worthy neighbourhoods at the moment. In what may come as a surprise to some, Strata revealed that Toronto’s Malvern, Rexdale, and Jane and Finch neighbourhoods are currently yielding the best investment returns.
These three traditionally overlooked neighbourhoods have produced the best ROI in the past 12 months, with appreciation rates that are outpacing the downtown core by as much as 20 percent. The findings include a total of 24 condo properties, with the top three performing buildings below (make note):
480 McLevin Avenue: +22%
10 Tapscott Road: +19%
1701, 1703, 1705 McCowan: +18%
Jane and Finch
10 Eddystone Avenue: +25%
10 Tobermory Drive: +24%
5 Frith Road: +19%
6 Humberline Drive: 23%
700 Humberwood Boulevard: +14%
710 Humberwood Boulevard: +10%
What Happened Over the Past Year?
Toronto’s average condo appreciation rate is two percent year-over-year. But both Malvern and Jane and Finch, for example, have seen an increase of 14 percent and 11 percent respectively during the past 12 months(!).
Meanwhile, condos in the downtown core have moved the opposite direction in the past year, showing a depreciation of -6 percent, according to Strata. The downtown condo market is widely expected to rebound, however, once the lifeblood returns to Toronto streets and office buildings, and when widespread immigration resumes.
What the Experts Have to Say
In the meantime, Robert Van Rhijn, Broker of Record at Strata.ca, believes it’s immigrant populations that are driving appreciation rates in North York, Etobicoke, and Scarborough.
“Many immigrants may not have the means to purchase in the heart of the city. And because prices downtown are typically higher, people usually look to outlying neighbourhoods for better value,” says Rhijn. “This creates more demand than there is supply, resulting in value increases as buyers compete and outbid one another. Our data shows that sellers in Jane and Finch, Rexdale and Malvern have been the beneficiaries of this trend over the past year.”
A natural byproduct of rising prices, of course, is gentrification – something that has the potential to drastically transform a neighbourghood in a matter of years (just ask Leslieville).
“As prices rise, we’ll undoubtedly see the typical signs of gentrification occur. That means more boutique shops, restaurants, and other amenities popping up in these areas,” says Rhijn. “This will result in even more demand among a more diverse demographic of buyers. Both families and investors would be smart to start exploring these neighbourhoods, given they may look quite different 10 years down the road.”
To get the condo hunters’ wheels turning even further, Strata released another report this week that revealed more options, highlighting Toronto neighbourhoods with below-average condo prices. These include Old East York, East York; Flemingdon Park, North York; West Mall, Etobicoke; Dixie-Applewood, Mississauga; and Thornhill – Markham.
With most eyes on the single-family home market, now may be a good time to start the condo search.