2022 Downtown Condo Comeback Amid GTA Housing Fall

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Downtown Condo Comeback Amid GTA Housing Fall

Toronto Skyline

The housing market has certainly experienced its fair share of difficulties over the years. In fact, I remember a time when talking with investors that the pandemic wasn’t even relevant. The greater Toronto area was flourishing and robust.

But as the pandemic took a turn, the retreat from downtown Toronto to exurbia and beyond became common. Only recently have I come to notice a resurgence in activity downtown.

Driving downtown yesterday, it was the first time after two years of lockdown that I had seen Toronto vibrant and ignited again. Supercars such as Lamborghinis, Ferraris, and Porsches peppered the Bay Corridors showing signs of a new infusion of young wealth. 

Even amidst recent rate hikes, people just can’t beat the rewards that come with living downtown. Coupled with the fact that supply of traditional single-family and attached homes remains suppressed, people are turning to condominiums and fueling a noticeable comeback to downtown living. 

Trending Towards Recovery for Downtown Condos


The Canadian housing market has remained red hot despite recent home buying headwinds. Investors continue to gobble up rentals despite the ban on foreign buyers which, to be frank, won’t have anywhere near its intended effect. 

However, progress toward a more balanced market appears to be coming. People are returning to downtown Toronto as evidenced by a major uptick in purchase activity in the condominium market. This multi-faceted recovery is a good sign that life might just be returning to normal post-Covid.

Affordability is Improving

One of the significant issues plaguing homebuyers is affordability. With home prices already elevated, rising rates have only exacerbated the issue barring many from entering the market. 

Although we haven’t seen much capital appreciation in the downtown market compared to pre-Covid levels, I still predict that rents will continue to increase by 20% year-over-year.  

affordable housing

The market already is trending in this direction, as the monthly rent for a single-bedroom unit recently reached $2,145 in 1Q 2022 marking almost a 18% year-over-year uptick. Two-bedroom units are up a little over 17% year-over-year. 

But increasing rents might just be a good thing, igniting a fire under current renters and equalizing the playing field making the cost to buy a home much closer to renting. In fact, sales of condominiums were up 120% downtown and 72% in the Greater Toronto Area.

rising house rate

Better Consumer Confidence

In general, consumers are also becoming much more confident in the economic recovery post-COVID sparking a return to downtown living and all the perks that come with it. 

Nevertheless, there are some that are still concerned about returning to the area whether it be that they are afraid lockdowns are coming back, fear the stock market might crash, or are increasingly concerned about a rising rate environment coupled with high inflation. 

Yet if history has taught us anything it’s that Toronto is the one of the only few places in the world that can benefit from this chaos. Think of it like trying to turn a freighter. There might be a small lag but once ramped up, nothing can stop it.

Tighter Labor Market


Part of what is fueling the downtown condominium comeback is a strengthening labor market. Economic conditions are improving, supported by increased commercial activity downtown.

For starters, office vacancy rates are much lower than they were before. Gasoline prices have also helped push people to live inward where transit is more readily available. The gap between suburb to downtown ratio is quite low.

Similarly, many major retailers are also migrating downtown due to an influx of new wealth as a way to capture more business from those with higher spending power and the younger generation crowd.

In December, the economy added twice as many jobs that it was estimated to, dropping to 5.9% which is close to the last low point back in February of 2020. 

Meta Platforms Inc. has even announced plans to create up to 2,500 jobs throughout Toronto as it announced plans to build-out a new engineering hub.


Pro-Immigration Policy

The immigration policy that the Trudeau administration has implemented should help bolster the influx of generational wealth into Toronto. Historically, population growth puts direct pressure on housing. 

Immigrants are a big part of Canada’s population and although there was a recent temporary ban on foreign real estate buyers, the number of foreign-born citizens is still high (21% in 2020 according to the Council on Foreign Relations).

Even students from abroad are now forced to come back to Toronto to study and live. Areas like Liberty Village, Davisville Village, and Brockton Village also continue to be welcoming areas for young, affluent professionals. 

Key Takeaways

Let’s face it, real estate markets are driven by sentiment. But in reality, the major force driving up real estate prices is population growth. Interest rates will eventually flatten out. 

People are concerned with high inflation, making higher rates necessary. But it also means people will seek alternative investments to ensure their investments won’t be devalued. Parking money in real estate is one of the most traditional and risk-averse ways to hedge against inflation. 

Buying real estate was on everyone’s mind up until about three months ago. Now we have seen buyers stagger and think that the market will tank due to a potential 1-2% rate hike.

Yet, the fact remains that the foreign buyer ban won’t do anything. The market has been driven by negative news in the media. If you stop and think, it’s actually the perfect time to buy. 

The revival of the downtown condominium market is a testament that the housing market is alive and thriving. Furthermore, if affordability is improving, economic conditions remain stable, and Canada continues welcoming immigrants, we will never have enough spots for people to live. 

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