Toronto’s burgeoning real estate market is showing a distinct trajectory from that of Manhattan, and economists predict it may soon eclipse Vancouver as the nation’s most expensive housing market.
Royal LePage’s president and CEO, Phil Soper, asserts that the essential factors sustaining Toronto’s real estate landscape remain robust despite facing some recent hurdles.
As Canada experiences a decline in interest rates, which is predicted to energize real estate activity across the nation, Soper anticipates a significant surge in Toronto’s housing market by 2025.
“Toronto is still an incredible bargain in comparison to Greater New York, particularly Manhattan. While it remains tough and expensive, we have experienced an unusual period in the Canadian housing sector over the past 26 months. Remarkably, home prices have not escalated, but wages, salaries, and savings have,” Soper explains. “Cities like Halifax, Montreal, and Calgary have seen their recovery begin several months ago, while Toronto and Vancouver will likely be the last to rebound from the post-pandemic slump.”
Soper forecasts that the forthcoming drop in interest rates will ignite Toronto’s housing market boom, positioning the city to surpass Vancouver as the most expensive real estate market in the country.
In the long run, he highlights that Toronto’s high-income levels, robust immigration, and continued interest in homeownership will help Canada maintain among the highest homeownership rates in the G20, despite some potential homeowners being priced out of the Toronto market.
Soper’s journey to his current role at Royal LePage includes a fascinating backstory. Growing up in Calgary, he pursued a spectrum of niche interests, from athletics to computer technology. His impressive athleticism earned him a spot on the University of Alberta’s track and field team, while his passion for early computing led him to pursue a degree that merged business and technology, which in turn earned him a position with IBM shortly after graduation. His dual expertise in both tech and sales later enabled him to step into a leadership role as the global technology giant transitioned from hardware to business services.
After spending five years in Toronto, Soper faced a pivotal moment as a single father; he chose to leave his 17-year-long role at IBM and accept a position at Royal LePage, mere weeks ahead of the dot-com crash in 2000.
“The technology sector in the late ‘80s and ‘90s felt like magic, but the 2000s proved challenging; my successor at IBM had to unleash layoffs that affected hundreds of employees,” he reflects. “However, the past 24 years since my shift into real estate have witnessed one of the strongest growth periods for the industry in Canada.”
For the last 22 years, Soper has been at the helm of Royal LePage, a 111-year-old firm headquartered in Toronto. The company stands as one of the largest real estate organizations in the country, employing 20,500 realtors—90 percent of whom are franchise partners—alongside an additional 3,000 administrative staff members.
Soper recently engaged with the Star from his Toronto home to discuss why he perceives homeownership as a plausible goal, the anticipated resurgence of the Toronto condo market, and why 2025 is set to see Toronto emerge as Canada’s priciest housing market.
What has kept you at Royal LePage for the last 24 years?
Throughout my tenure, I have cultivated lasting friendships. My senior team, the majority of whom have been with me for nearly my entire time here, remains incredibly close-knit. I have also enjoyed significant entrepreneurial opportunities as we have expanded the business and established the Royal LePage Shelter Foundation, the country’s largest charity dedicated to combating violence in communities. Additionally, this has been a thrilling era for the real estate industry.
Why was Canada’s real estate market in a boom for so long?
At its core, a thriving real estate industry hinges on increasing demand and the people’s ability to finance it. For instance, South Korea boasts a prosperous economy, yet their birth rate stands at 0.7, resulting in a declining population and a faltering immigration system.
Canada’s birth rate hovered around 1.26 last year, which, while decent for an advanced economy, has been buoyed by a vigorous immigration framework; over 60 percent are economic immigrants—arriving with essential skills or capital as entrepreneurs—versus approximately 25% in the United States.
Although Canada has recently reduced its immigration targets, I am confident that future administrations in Ottawa will reaffirm their commitment to increasing immigration due to the challenges posed by an aging population and our established cultural and governmental frameworks that facilitate integration.
Why does the housing market feel broken?
The perception of a fractured housing market in Canada resonates with similar sentiments in the United States, Australia, Germany, and other advanced nations. We have consistently underbuilt homes in relation to organic demands, compounded by immigration-driven needs, over many years. However, various subtleties add layers of complexity to the situation.
We are also experiencing slowdowns in construction processes due to the burgeoning requirements for environmental assessments, density considerations, and transportation planning. Notably, in 2022, it took on average 650 days to secure approval for a 500-unit condo project. This is a stark contrast to 1995, where it took just 10 months to complete a single-detached home, whereas in 2024, it takes around 25 months. Since 2018, the cost of building a home has surged by 110% in Toronto.
Where does that leave us?
We are currently lagging in meeting the housing demands required to support population growth. However, the post-pandemic slowdown has effectively obscured true demand. We anticipate a significant rebound next year, leading to discussions of notably steep home price hikes re-emerging.
While the last two-and-a-half years offered a valuable breather for the market, the slowdown primarily affected Vancouver’s lower mainland and the Greater Toronto Area (GTA), while the rest of the country has shown steadfastness.
Is Toronto’s condo market crashing?
The condo market in Toronto has been one of the slowest segments of the real estate sector across Canada in recent years, attributable to specific factors influencing its dynamics. A pivotal issue has been the sharp spike in borrowing costs, which has sidelined many first-time buyers.
Since first-time homebuyers typically rely on loans to finance their purchases, their absence has significantly impacted the condo market. Many may choose to wait for rates to decrease further, as illustrated by the recent rate cuts, but this behavior will soon alter as home prices begin to rise; even with lower rates, buyers will face higher overall costs.
Independent investors, who usually tolerate cash-negative situations if they foresee potential appreciation, have also been impacted. High interest rates coupled with falling values have disincentivized property holdings. Despite this, condo values have only decreased by 2.4 percent this year, indicating that we are not on the brink of a market crash.
Moreover, Canadians currently enjoy about seven percent in household savings—significantly higher than the typical two percent, indicating that capital is accessible. As interest rates fall, first-time buyers will re-enter the market, leading to a gradual increase in condo values, likely by the first quarter of 2025, prompting investors to return due to low vacancy rates and rising rents.
Are young people giving up on home ownership?
The age of first-time buyers is on the rise, mirroring patterns observed among millennials. A significant segment, 54 percent of individuals in their 30s, maintain that homeownership is a feasible goal despite rising challenges, whereas 26 percent remain uncertain. This reflects an ownership rate comparable to that of Generation X and Baby Boomers.
Will the average Torontonian be able to afford a home in the future?
While Vancouver’s home ownership rate remains elevated in comparison to global standards, it trails behind many other Canadian cities, which is a scenario I foresee for Toronto. I expect Toronto’s homeownership levels to remain lower than Montreal’s but should stay above 60 percent, aided by government initiatives aimed at maintaining this status quo. There’s potential for more proactive measures on the supply side to continue addressing this ongoing concern.
It is also worth mentioning that we have yet to witness net migration from the Greater Toronto Area to regions such as Atlantic Canada, Calgary, or Montreal, but this trend is evolving. Individuals are seeking affordable housing solutions, creating a dynamic where people relocate when markets overheat, helping to stabilize the overall housing landscape.
Furthermore, the expansion of the Golden Horseshoe, buoyed by the prevalence of hybrid working models, indicates that people are increasingly willing to commute from surrounding areas such as Orangeville, Burlington, and Bowmanville for just a couple of days each week.
Toronto remains an expensive, vibrant city, but I believe that the market will continue to evolve and provide solutions for its residents, as I have witnessed this phenomenon multiple times throughout my career.
**Interview with Phil Soper, President and CEO of Royal LePage**
**Interviewer:** Thank you for joining us today, Phil. Toronto’s real estate market has been on a unique trajectory compared to Manhattan and Vancouver. What are the key factors contributing to this trend?
**Phil Soper:** Pleasure to be here! The primary reasons include Toronto’s still relatively affordable pricing compared to Manhattan and strong, continued demand for housing driven by high immigration, robust income levels, and a cultural preference for homeownership. While we’ve seen some market fluctuations, I firmly believe we’re poised for a significant recovery, especially with interest rates declining.
**Interviewer:** Speaking of interest rates, how do you foresee their impact specifically on Toronto’s housing market in the coming years?
**Phil Soper:** Lower interest rates typically stimulate more real estate activity. With a resurgence expected by 2025, we anticipate an uptick in demand that could see Toronto surpass Vancouver as the most expensive real estate market in Canada. The ongoing affordability concerns mean that while prices may rise, wages and savings are also growing, creating a more balanced market going forward.
**Interviewer:** Many are concerned about the state of the condo market in Toronto, which has lagged behind other segments. Do you think it’s in a downward spiral?
**Phil Soper:** Not at all. It’s true that the condo market has faced challenges, primarily due to high borrowing costs sidelining first-time buyers. However, values have only dipped slightly, and with rising household savings and interest rate cuts, we expect a revival by early 2025. The fundamentals are still there, and many investors are waiting for the right moment to re-enter the market.
**Interviewer:** There’s a widely held belief that young people are giving up on homeownership. What’s your take on that sentiment?
**Phil Soper:** It’s definitely a concern. The age for first-time homebuyers is rising, which can make it seem like young people are stepping back. However, I believe that with proper support and the inevitable rebound in the market, many will still pursue homeownership. We need to ensure that pathways to ownership are created, especially in key markets like Toronto.
**Interviewer:** Lastly, what keeps you motivated after 24 years at Royal LePage?
**Phil Soper:** The strong relationships I’ve built with my team and the ability to influence positive change in the community keep me driven. The growth of our company and our commitment to social initiatives like the Royal LePage Shelter Foundation has made this journey incredibly rewarding. I’m excited about the future of real estate in Canada and thrilled to be part of it.
**Interviewer:** Thank you for sharing your insights, Phil. It sounds like the future of Toronto’s housing market is bright!
**Phil Soper:** Thank you! It is, and I’m looking forward to seeing how it evolves.
