City could follow San Francisco into becoming even more unaffordable for non-tech workers.
Toronto Home Prices:
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It sure looks like Toronto’s tech scene is quickly snowballing toward critical mass. With major news involving Uber and Google’s parent Alphabet coming on successive days, Canada’s biggest city is all of a sudden the prettiest girl – or most handsome dude – at the global tech ball.
In case you missed it, Uber on Monday announced a new research centre for driverless cars, to be helmed by University of Toronto professor Raquel Urtasun. On Tuesday, details emerged of Alphabet’s Sidewalk Labs unit applying to turn a 12-acre strip of downtown land into an internet-based “smart zone.”
The dual news follows other big recent developments, including the University of Toronto’s opening of the Vector Institute artificial intelligence research lab and Oxford Properties’ plan to redevelop Front Street into a startup and innovation district.
In a previous post, I wrote about how those moves were exciting positives for the city’s – and country’s – tech ambitions. This week’s events will only kick that fervour and momentum up a few notches.
But there could be a downside. While the city’s transformation into a tech hub resembling San Francisco will certainly create more high-skilled and high-paying jobs, it could also put even more upward pressure on Toronto’s runaway housing prices.
And just like San Francisco, which has its own real-estate crisis, it could make Toronto even more unaffordable for regular folks.
Michael Turner, executive vice-president of Oxford Properties, downplayed the potential issue when I spoke to him recently about the proposed Front Street tech district.
“As unaffordable as the headlines suggest it is, [Toronto] is much, much cheaper than San Francisco,” he said.
He has a point, to an extent. The average Toronto house price is up to $916,000, which is still a good deal off of San Francisco’s average of $1.2 million (U.S.), or $1.6 million (Canadian). A typical one-bedroom apartment in Toronto rents for $1,776, versus a whopping $3,510 (U.S.) or $4,811 (Canadian) in San Francisco.
Still, while that may be the case now, it may not be for long. Prices in both Toronto and Vancouver are skyrocketing, with the latter expected to overtake San Francisco within two years.
San Francisco’s tech boom has been singled out as the primary driver of the city’s rapidly inflating real estate prices, and it makes sense as to why. Having more highly paid individuals living there means there’s a much bigger supply of rich buyers for real estate owners to cater to. Competition between those buyers is also more fierce.
While downplaying the problem, Turner also pointed out that Toronto’s tech efforts will lead to a similar increase in supply. “These are high-paying, high-scale jobs,” he said. “This is not a constituent that also needs affordable housing.”
That’s all well and good, but there is also everybody else to think about.