A recent report from Re/Max Canada has revealed that home renovations and teardowns have significantly contributed to the rise in Toronto home prices. During the pandemic, billions were spent on renovating and replacing older homes, particularly in neighborhoods where property values had not kept pace with rising land costs. This activity has raised the average price of single-family homes, which surged by nearly 35% between 2019 and 2023. The increase has been particularly noticeable in areas undergoing "infill" development, where smaller homes are replaced by custom builds, changing the landscape of Toronto’s housing market.
One key factor driving this trend is the scarcity of available land, pushing homeowners to either renovate or tear down existing homes. Many homeowners are choosing to upgrade older properties, turning them into larger or multi-generational homes. This revitalization process has not only impacted the price of individual homes but also influenced surrounding property values, contributing to the overall escalation of home prices.
The report also points to a shift in housing preferences. With Toronto’s real estate market increasingly focusing on high-density developments, detached homes are becoming rarer. This has led some homeowners to invest heavily in renovating their current properties, further fueling the rise in home values. Between 2019 and 2023, the national renovation spending exceeded $300 billion, highlighting the growing impact of home improvement projects on the market.
In addition to rising home values, the increase in renovation and teardown activities has reshaped the city’s housing supply. Custom builds and revitalized homes are transforming previously affordable areas into high-demand neighborhoods, contributing to the ongoing affordability challenges in Toronto. With this trend expected to continue, home prices in the city could remain high despite efforts to boost the supply of affordable housing.
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