London, Ontario? Oh, probably just a fraction!
But alas, I speak not of the wee town by day, hockey hotbed by ‘knight.’
I speak rather of a world-famous, world-class, historic, beautiful, and expensive city that is home to our Monarch.
Just humour me, and look at this…
Gorgeous!
Absolutely, gorgeous!
And if you look at a house like this, and think of Toronto, where in Toronto would you expect to find it?
I know, I know – you’re going to tell me there’s nothing like it.
And maybe that’s fair.
We say things like “English-style” or “English cottage” when referring to Toronto homes.
We use “Georgian” but don’t really insinuate it’s South Carolina inspired. But there’s something special about an English style home in Toronto.
Maybe we all subconsciously want to give back our independence, and start paying taxes to the King & Queen?
Anyways…
We see the value of “English-style” homes here in Toronto all the time.
It didn’t take me very long to pull this from the MLS:
That white-and-brown pattern is the unmistakable look of an English-Tudor inspired home, and if you look behind the peak, you can see the clay roof tiles, which is another classic English trait.
But I want to go back to that first house, for a moment, and make a comparison to Toronto.
Some readers love when I do features on real estate around the world, and some readers think it’s silly to compare Toronto to New York, let alone London.
But a colleague of mine was at a real estate conference in New York last weekend, and he told me, “The market in Toronto is nuts, and we’re all trying to make sense of it, but when I saw things selling for $2,500 to $3,000 per square foot, in U.S. dollars, Toronto suddenly didn’t seem so bad.”
That’s true.
And yet I feel like so many people in Toronto don’t want to hear it.
So let me take things a step further, and at the risk of depressing you, let me give you my very-long-term prediction for Toronto:
I think that in 50 years, only the city’s elite will own houses.
Fifty years is a long time, and many of you reading this really don’t care.
But I think even in, say, fifteen years, people will look back and laugh about what 5-bed, 5-bath houses on 50-foot lots in North Toronto used to sell for.
That house I showed above – that’s on Wadham Gardens, Primrose Hill, in London.
Here’s the map:
So as you can see, we’re not talking about being right in the middle of London.
We’re not having tea with the Queen.
We’re not living next to St. Paul’s Cathedral.
And we’re not on Bishops Avenue, which is where you find the “obscene” real estate in London, similar in price to, say, The Bridle Path, although whereas the Bridle Path is in the middle of nowhere in Toronto, Bishops Avenue is in the middle of the action.
But this house is on a lot similar to what you might find in North Toronto, and you might even call the style comparable:
I can’t say that the interior of that house is any nicer than what you might find on Glengowan or St. Leonard’s in Lawrence Park.
In fact, I might say that aside from that lovely backyard, this house is actually inferior in terms of finishings.
So what does a 5-bed, 5-bath on a 50-foot lot cost up in Lawrence Park?
Older? Maybe as low as $3,000,000.
Newer? Maybe upwards of $5,000,000.
But having just combed through the MLS archives, I think you can get something spectacular for $3,700,000.
$3,700,000.
Does that sound like a lot to you?
It does, if you’re renting for $1,500. Or even if you’re bidding on a $1,200,000 house in High Park tonight.
But in the grand scheme of things, and compared to other world-class cities, $3,700,000 for a 5-bed, 5-bath, in an area like Lawrence Park is nothing.
Just look at that house in Wadham Gardens.
Any guesses as to what it’s listed for?
Wanna try before I reveal the price below?
How about $9,950,000.
Steep, eh?
Oh wait, but that’s British Pounds, so it’s actually $16,401,731.
Yeah, that exchange rate is tough.
So $16,000,000 for that house in Wadham Gardens, versus $3,700,000 for something similar in Lawrence Park.
Does that tell enough of the story for you?
Because there’s more!
That $9,950,000 BP listing is for part of the house:
Yeah.
It’s an apartment.
A big one, at that.
But it’s the ground floor, and the “first floor,” which I guess is what they call the second floor, and the top floor is yet another apartment.
So $16.4 Million CDN, and you get part of a house in the equivalent of Lawrence Park.
Rich enough for you?
I know that doesn’t make Toronto’s real estate market any easier to swallow, but surely it has to give you some perspective…
Lord sinjin smythe
at 8:53 am
“Listen to this, Susan. An estate agent from Toronto is comparing a neighbourhood there to Primrose Hill.”
“Cheeky. Are their views of St Paul’s and Westminster Palace protected from development, too?”
“I don’t think they can see those from there, Susan.”
“Gracious! Where IS Toronto, at any rate?”
“It’s in one of the colonies, Susan. Australia, I think.”
Joe Q.
at 9:15 am
I LOLed.
Geoff
at 10:42 am
gotta love a sneaky james bond reference.
Samantha
at 12:53 pm
Very cute and creative. But to be fair David is pointing out that real estate costs 4 1/2 times as much over there, and with the higher cost of goods (probably 2-to-1?), affordability is dire compared to Toronto.
Solicitors for Lord S-S
at 1:47 pm
We have it on good information (see http://www.bloomberg.com/graphics/uk-property/ ) that the median home price in London is £442,432 which would come to 730,012 of your Canadian Dollars. Further, we are led to believe by your TREB that the latest median home sale price for your City of Toronto, formerly known as York, is $564,900. Grammar school arithmetic shows London to be only 29% more expensive than Toronto (formerly York) by this dare we say egalitarian measure. We therefore request that you retract your slander upon our fair city. Should you refuse, we reserve the right to take further measures.
We are pleased to convey an apology from Lord Sinjin Smythe, who has been informed that Toronto (formerly York) is in Canada. Any reference to your undoubtedly harmonious city being originally populated by transported convicts was inadvertent, and in error.
Yours in duplicitousness,
Jarndyce & Jarndyce, Solicitors at law.
Gray’s Inn, London
Kyle
at 4:34 pm
LOL, this is gold. But if you are comparing the average price of a London dwelling to the average price of a Toronto dwelling, you need to consider the average size.
Solicitors for Lord S-S
at 6:24 pm
We have been instructed by our client to issue the following release in response to the above:
“Location, location, location.”
Yours in duplicitousness,
Jarndyce & Jarndyce, Solicitors at law.
Gray’s Inn, London
O
at 9:23 am
Nailed it again. For years we demanded to be treated as a “world class city”. You know what world class cities have? World class prices. My friend who does business all over the world (and gets paid in American $$$) considers Toronto prices to be cheap compared to other centers and at a discount with the US exchange rate. Add a general distrust of the stock market and this guy is picking up properties left and right…currently looking for his third house! Yes, I hate him too…..Toronto isn’t New York the haters say…really? We have the night life, sports teams, diversified industry, are more or less gun free. Even if you are not in the core, you can have a house with a yard and then be in a complete urban environment within 20 minutes.
Kyle
at 9:39 am
There are those who absolutely bristle at any comparison of Toronto with New York and London. They”ll say Toronto isn’t on par with those cities. Look, everyone gets that and no one is claiming they are on par but….
Prices in London, New York and Hong Kong are anywhere from 5-15 times the price of Toronto’s on a per sq ft basis. Are those cities really 5 – 15 times better than Toronto? I think anyone who would answer Yes doesn’t actually know Toronto. Toronto is a Global hub and quickly becoming a 24 hour city. All those high paying professions that drive the high real estate prices in those cities are also found in Toronto.
“I think that in 50 years, only the city’s elite will own houses.”
IMO, i think it will happen in less than 20.
Carl Warner
at 3:34 pm
Hey, what about Sydney (not N.S.) where RE values exceed those of Vancouver, let alone Toronto. World class? Why? Because they’ve got a great looking opera house that no one ever goes to (because you’d have to watch, you know, an opera)? Don’t make me laugh, Bruce.
Kyle
at 4:56 pm
Did i claim that Sydney was world class?
Carl
at 10:59 pm
No, sorry, my (poorly made) point was that just because Sydney real estate is pricier than Toronto’s doesn’t necessarily mean it’s a better place to live, in the same way that, as you said, 5x pricier RE doesn’t necessarily mean 5x better.
Kyle
at 9:19 am
I can’t speak to Sydney, unfortunately i’ve never been there…yet. But i can say real estate demand in a city is made up of two parts – ability and desirability. By ability i mean having enough people in the population who have the incomes and/or the wealth to afford the prices. New York, London AND Toronto all have this, perhaps Sydney does too (i don’t know their market well enough to say). Desirability is much more grey. Living in a world class City is obviously desirable to many, however for everyone who likes hustle and bustle there is someone who likes solitude, for some “culture” means galleries, theaters and museums, for others “culture” means people smiling on the street, or saying “sorry” when they bump into you.
So i’m not suggesting that “World class-ness” is the only facet that drives desirability. It certainly isn’t the only determinant in over/under valuation. Obviously there are many other facets – geo-political stability, personal security, tax friendliness, property rights, access to education, access to opportunities, etc. Monaco, one of the most expensive cities in the world is no where to be found on the World Class lists. When i talk about Toronto’s world rankings I’m simply challenging this oft repeated dismissal that on a world scale Toronto is in a different universe than New York and London. The reality is pretty much anything found in those cities can be found in Toronto just not to the same abundance.
Boris
at 10:22 am
How is being ‘gun free’ (I assume you mean from a legal, gun ownership perspective’) a positive? Chicago is ‘gun free’ by that definition and half the city is a warzone. How are the gun free zones in Paris, Brussels and Cologne working out?
Ralph Cramdown
at 10:38 am
Toronto is a nice city, but its global influence and relative importance probably peaked about a decade ago, and will continue to decline. While all the locals were debating whether we were world class, many other places in the world surpassed us. Canada would no longer qualify for the G8 biggest economies, because Brazil and India’s economies are now larger than ours, and we’re about to be surpassed by South Korea. While we were arguing about transit, Dubai built itself into a global hub city from scratch, and that’s why there’s now three flights a week from here to there on the world’s biggest airliner with the world’s best airline. China is building a city the size of Toronto every few months, and they’ve all got better transit. I think you get the point. It isn’t that Toronto isn’t getting better, but other places are improving much faster. Should I mention that the rust holes in our old streetcars are getting so big that a small child is probably going to fall out of one soon?
O
at 11:03 am
Exactly what Kyle says. Other cities may be more exciting, prettier, have a richer history, better economy etc, but for the price Toronto is a bargain. Good schools? Check. Lots of state of the art hospitals? Check. Great nightlife? Check. Odds of getting shot? Low. I will also argue that due to our multicultural nature, our food is BETTER than a lot of other cities. You want the real “authentic” ethnic cuisine? We got EVERYTHING here. Seriously, I get it ..I grew up in the burbs saying Toronto sucks, but after living in the city for 20 years, I can say we really do have it all.
Ralph Cramdown
at 12:43 pm
Shouldn’t it be obvious that if Toronto was a “bargain,” we could compare it to prices in other than the top few most expensive cities in the world? The whole point of the post was “hey, prices are crazy here, but not as crazy as in one of the most desirable neighbourhoods in London!”
Kyle
at 4:50 pm
People compare to New York and London because they’re easily relatable (like a gold standard), not because they’re the most expensive. There are other more expensive cities like Monaco, Singapore and Geneva, but they’re more obscure and people generally have no sense of what prices are like there.
If you have a gold standard, it only makes sense to use it and not make reference to other more obscure precious metals.
Carl Warner
at 3:31 pm
Ever tried to get vegetarian in Paris?
Boris
at 3:50 pm
You mean vegetarian halal?
Condodweller
at 2:50 pm
I believe one factor to be a world-class city is the number of high and ultra high net worth individuals residing in the city. I mean what better indication of a world class city than the most people for whom money is no object want to live?
The Knight Frank wealth report is an interesting read: http://content.knightfrank.com/research/83/documents/en/wealth-report-2016-3579.pdf
One of the most telling quotes IMHO is this:
Over the past decade, The Wealth Report
has ranked the cities that matter most to
the world’s wealthy, based on where they
live, invest, educate their children, grow
their businesses, network and spend their
leisure time.
On all measures, year-in year-out,
London and New York have vied for the
two top slots. No other city comes close in
terms of their breadth and depth of appeal.
Paully
at 10:57 am
I always thought that the term “Georgian” referred to a period of time, as in during the reign of King George, not a geographic location.
Mike
at 1:26 pm
Yes. The style is what was in fashion during the time of the reigning Monarch. Georgian was when the four King George’s ruled, Victorian is from when Queen Victoria ruled and Edwardian from the turn of the last century when King Edward reigned.
Most of Toronto’s older homes are Victorian or Edwardian then followed by a brief period of Arts & Crafts. After the wars it kind of stopped.
Kramer
at 11:24 am
Off topic, but someone please point my brain in the right direction….
In what galaxy is it possible for an insurance entity (CMHC) to collect insurance premiums on all homes with <20% downpayment for 15-20 years and barely EVER have to pay any "claims" (or whatever they are called)… and then INCREASE premiums following those decades of never paying claims? How the hell does this actually work? Is the CMHC the most profitable insurance entity on earth the past 15-20 years?
Ralph Cramdown
at 11:42 am
Insurance companies don’t set premiums based on past risk, but on their best estimates of risk going forward. And CMHC isn’t just an insurance company, but an instrument of government policy. And I think Warren Buffett’s little outfit was probably the most profitable insurance entity on earth the past 15-20 years.
Condodweller
at 1:38 pm
What bothers me more is that people are paying for mortgage insurance and probably most do not realize that they are not the beneficiary of the policy they are paying for.
Ralph Cramdown
at 3:35 pm
They may not be the beneficiaries in the event of default, but they sure are the beneficiaries of the lower interest rates. Ain’t nobody gonna lend some stinky-ass 630 credit 95% of the value of his house at 2.5% interest, but if he pays the premium, his credit is suddenly upgraded to AAA, just like the government of Canada, and lenders are falling all over each other. Read a prospectus for a CMHC NHA mortgage backed bond. It’s hilariously short — no stats about the borrowers, their credit, the collateral or anything. Basically it just says “guaranteed by Ottawa.”
Boris
at 3:48 pm
yep, Cdn housing is wildly subsidized by the govt/taxpayers
Mike
at 2:10 pm
London’s population 8.6mm
New York’s population 8.4mm
Toronto’s population 2.6mm
population of GTA 6mm
Area of New York City 789 km2
Area of Greater London 1,527 km2 includes surrounding areas
Area of Toronto 632 km2
Area of GTA 7,124 km2 includes surrounding areas
London has a population density of 5632 people for ever km2 whereas the GTA has a density of 842 people per km2. So the GTA would need a population of just over 40mm to match the density of London.
According to Christies the average luxury home price in London per square foot is just under $2,000 whereas Toronto is just under $1,000. If Toronto were to face the same demand that London sees, then prices would be over $6000 square foot in Toronto. I’d say given that, London represents quite a bargain compared to Toronto.
http://luxurydefined.christiesrealestate.com/blog/market-insights/the-price-of-luxury-a-global-comparison-of-square-foot-prices
Condodweller
at 6:56 pm
I was going to mention demand based on population density but did not have the City areas at hand. Based on this alone I think David’s assumption in 50 years, with all due respect, is nuts. We are about 20 years into a bull market, something is going to give way before 50 years. That’s my educated guess anyway.
WEB
at 10:15 pm
Amazing post Mike. Can you imagine the gridlock we would have if the population was 40M in the GTA?
Appraiser
at 4:43 pm
Over 90,000 new people per year call the GTA home. It’s not going to stop anytime soon.
Prices in T.O. will continue to rise. Why? TREB mid-month stats are out and new listings are down 28% from last January. Wow!
Ralph Cramdown
at 8:31 am
“Both the 905 area and the city of Toronto experienced declining net immigration in 2015, the fourth yearly decline for Toronto and the second yearly decline for the 905 area. […] Historically, the city of Toronto lost significant numbers of people to the 905 area with the attraction there being a supply of newer ground-related housing and employment opportunity. During the past decade, the hemorrhaging of population
from Toronto diminished and then stabilized at a net loss of about 24,745 persons per year.” So sayeth this study from Ryerson, with data sourced from Statistics Canada CANSIM tables. goo.gl/7G8y1f
With home prices up over 30% from the date of that data, which is Statscan’s most recent, and wages NOT up anywhere near that, I’d say the GTA has become less attractive for potential immigrants since then.
Appraiser
at 6:19 pm
“New people” to the GTA are not all immigrants. FYI.
And P.S. we all can’t be superstars like you Ralph.
Bottom Line: Toronto is on the rise, it is you that is on the decline Ralph. By the way, are ‘ya still ‘splainin why you rent to the inlaws? Asking for a friend.
How many years Ralph…how many!
Kyle
at 1:34 pm
@Ralph
I think you need to re-read your Ryerson article. It’s talking about migration between 416 and 905. Not GTA and the rest of the world as you’re suggesting.
Ralph Cramdown
at 5:45 pm
The Article covers all categories, but my saying Toronto is net -25k/year was an error. That was one category, not additive of others. Looks like we aren’t net negative of arsehole appraisers, though. If anything, there’s a surplus.
Appraiser
at 7:24 am
Toronto recognized as one of the world’s top five fintech centres.
“Toronto – very strong government support, low cost of accommodation, great cultural diversity and plenty of capital available”
http://www.investinontario.com/spotlights/toronto-recognized-one-worlds-top-five-fintech-centres?utm_source=twitter
Ralph Cramdown
at 7:53 am
Toronto commissioned and paid for this PR piece, which probably won’t be read outside of Ontario. Your tax dollars at work.
Kyle
at 12:00 pm
Toronto is globally recognized as a tech hub. This is corroborated by Fast Company magazine and Expert Market (definitely not fake news outlets). Who rated it third best tech hub in the world to live/work. Even beating out San Francisco, largely because of how affordable (i.e. undervalued) Toronto is.
https://www.fastcompany.com/3061460/the-best-global-cities-for-working-in-tech
Ralph Cramdown
at 12:46 pm
If you’re a mediocre tech drone who wants a good quality of life, Toronto has its advantages, though obviously they are diminishing as housing costs rise.
But if you’re a tech superstar who wants to work with the world’s best, or you want the maximum chance of your startup being funded, bought out or going public for big bucks, you’ll consult Compass’s 2015 Global Startup Ecosystem Ranking — also mentioned in that Fast Company article and easily available if you google it. There, Toronto ranks 17 overall, just above Vancouver, and behind Silicon Valley, NYC, LA, Boston, Tel Aviv, London, Chicago, Seattle, Berlin, Singapore, Paris, Sao Paulo, Moscow, Austin, Bangalore and Sydney. Toronto ranks 14th for Performance, 18th for Funding, 14th for Market Reach, 15th for talent, and 18th for Startup Experience.
I like Toronto, I really do. I live here, and I’ve made good money working in tech here. But this constant obsession with where we rank, and our rampant grade inflation for ego stroking is tiresome. We’re a 3rd tier global city, and given current educational, demographic and economic trends, we should expect to slip down the rankings as other cities surpass us. Let me know when Canada gets its first Michelin Star.
Kyle
at 10:18 am
LOL, when it comes to real estate, buyers don’t care about Michelin stars, only tourists do. And while i agree that Toronto is way lower on the charts when it comes to start-ups, the reality is start-ups are just a small fraction of the tech industry. Google, Facebook, Linked In, Shopify, UBER, Salesforce, IBM, Apple, Microsoft, Ubisoft, Freshbooks, Just Eat, Ericsson, Telus, Softchoice, Cisco, and a tonne of other established massive tech giants didn’t all set up offices in Toronto to tap our “mediocre” talent pool.
How does this all relate to real estate? Simple – those companies have literally added tens of thousands of well paying jobs. Think about how many of those companies were in Toronto, or what their presence was here 10 years ago (the time frame you seem to think Toronto peaked) and compare it to now…
That is just the tech industry, Toronto also happens to be a major finance hub, pharma and life sciences hub, research hub, green tech hub, and a bunch of other hubs. So take that same thinking above and apply it across a bunch of other industries and you get the answer to the oft ask question, “who’s buying all these houses”.
L Martin
at 8:39 am
Spot on as they say over here! I’m a Canadian living in London, and whenever I hear how expensive Toronto property is, I think “you have no idea.” Yes, Toronto vs London is apples and oranges , but I agree that 4-5 times more expensive (and the pound is WEAK vs the dollar at the moment) is a bit goey. Maybe 2-3 times is about right? 3 times would be around $5,300,000 for the Toronto house comparison /up another 40%. But London property might still be on the slide (it is down 15-20% over last 2 years) , so maybe they meet in the middle somewhere…
doctor zhivago
at 11:42 am
What would that cost in Chicago?
Ralph Cramdown
at 1:55 pm
Cook County taxes will “kill” you. May I suggest something in a better suburb? In Highland Park, you can get 13,000 sqft on 2 acres for the price of the Toronto house. Or for under a mil, 5,600 sqft on 1/2 an acre. There’s only 26 restaurants in Chicago with Michelin Stars, though.
Kyle
at 10:18 am
After many years of watching tourism commercials, I think a lot of Torontonians have “the grass is greener” syndrome and have placed New York and London on a pedestal. I grant that those cities have far better transit, architecture, history, cultural institutions and offer WAY more places to spend money (i.e. bars, restaurants, shops, etc). But when it comes to stuff that matters to people buying real estate to live in, people from Toronto take for granted all the things Torontonians have that New Yorkers and Londoners would kill for. And to boot many of those things are FREE, but alas they’re not splashed across I heart T.O. commercials across the continent.
I live in Roncy/High Park, certainly not an elite neighbourhood, i’ve listed just a few of the things that are less than a 20 minute walk from my home that you simply won’t find in NY or London (outside of maybe their most elite neighbourhoods), because land prices are too precious to spare on such frivolities. And as a parent of young kids, i’d take these things over Broadway and more places to spend money any day:
– 4 skating rinks
– 4 wading pools
– 3 outdoor pools (including an olympic sized one)
– 3 indoor pools
– a library
– a beach
– 4 play structures
– 2 off leash dog parks
– A fitness trail that runs from one end of the city to the other
– 6 Tennis courts
– a soccer field
– a baseball diamond
– two basketball courts
– a community center
– a few really wicked hills to toboggan down
– a lawn bowling green
– a splash pad
Some mix of the above amenities are common in neighbourhoods all across Toronto, while they’re basically non-existent in New York and London.
Some of the other things that most Torontonians can do routinely without leaving the City, that most New Yorkers and Londoners can’t:
– take their kids to a splash pad
– play ball hockey on their street
– learn to ride a bike on your street
– BBQ
– ski
– golf
– fish
ex-Londoner
at 5:15 pm
I came across this blog post and can’t help but chime in, as I am an ex-Londoner and now a Torontonian, having lived in each for about a decade. Also, as it happens, I used to live fairly close to Primrose Hill in London and lived in the Lawrence Park area in Toronto for a few years.
I think comparing real estate in Toronto to London or NY is an interesting exercise, but I couldn’t help but chuckle when I saw the comparison was between a large detached home in Primrose Hill to one in Lawrence Park. The blogger obviously doesn’t know London too well ☺
To explain, Primrose Hill is luxury real estate. It’s considered very central (bear in mind that central London is much bigger than downtown Toronto), it’s right on Regent’s Park (Zoo, etc.) and a short walk from lots of attractions (near Camden, Baker St, walkable to the West End). Lots of celebrities live there… Gwyneth Paltrow, Daniel Craig, Jude Law, Kate Moss, etc. Paul McCartney used to there in his Beatle days, but now you’d have to go to nearby St John’s Wood to visit him! A massive detached house there is comparable to a one in Bel Air, not Lawrence Park. The best comparison would be to a prime Rosedale home, though I am not entirely sure that Toronto really has any areas that are directly comparable to areas like Primrose Hill, Notting Hill, Kensington, Mayfair, etc.
I would suggest a better comparison to Lawrence Park would be an area like Dulwich, Clapham, Chiswick, or Wimbledon. I’ve been following London house prices periodically, and the price differential is much closer than this blog would make it seem. In fact, I would say that, for what I can get in relatively central area in Toronto, I can get an equivalent home in an equivalent sort of area London for about the same amount, but in pounds instead of dollars. Given that London is London and many people there earn higher salaries, I find it quite amazing that the differential has become as close as it is (obviously it’s not just due to Toronto’s real estate boom… Brexit and the historically low exchange rate provide part of the explanation).