Royal LePage Provides Reckless Toronto Forecast

Phil Soper, CEO of Royal LePage, predicts that Toronto will become Canada’s most expensive housing market by 2025, surpassing Vancouver. He attributes this bold claim to a recovery in demand spurred by falling interest rates, population growth, and the resilience of homeownership aspirations. Yet, his argument raises eyebrows for its lack of rigorous economic grounding and overreliance on speculative trends.

Manhattanizing Toronto? Hardly.

Soper posits that Toronto remains a bargain compared to Manhattan, but the comparison is a red herring. Manhattan is a global financial nexus, buoyed by per capita incomes that dwarf those of Toronto. Its real estate prices reflect the unique interplay of high earnings, robust international investment, and global demand. Toronto, by contrast, is a strong regional hub, but it lacks the same economic heft or international pull. While Toronto’s housing market is expensive by Canadian standards, its affordability relative to Manhattan provides little insight into its future trajectory.

Vancouver is a Long Way Ahead

Toronto overtaking Vancouver as Canada’s priciest housing market by 2025 is a claim that strains credibility. A benchmark house in Toronto is valued at $1.375 million, compared to Vancouver’s $2 million—a staggering 45% gap. Closing this gap would require Toronto prices to rise dramatically while Vancouver’s stagnate, a scenario unsupported by current market fundamentals.

Even in the condo market, where the disparity is smaller—$650,000 in Toronto versus $750,000 in Vancouver—a 15% rise in Toronto prices is plausible, but Vancouver’s values are unlikely to stand still. Both cities face similar pressures of limited supply, high construction costs, and unrelenting demand driven by immigration and low vacancy rates. Expecting one to surge while the other idles ignores the interconnectedness of these trends.

Population Growth Without Paycheques

Soper highlights Toronto’s population growth and immigration as drivers of future housing demand but downplays a critical factor: immigrants need jobs to climb the property ladder. Full-time employment growth has slowed significantly, and unemployment has been rising.

Full-time employment has not kept pace with population growth, and without rising wages, neither renting nor buying becomes any easier. Indeed, affordability is already strained in Toronto, with housing costs absorbing an ever-larger share of household budgets. A further escalation in prices would risk widening the affordability gap, leaving an increasing number of would-be buyers priced out of the market.

He also fails to explain why prices dropped in 2023 and 2024 while population growth was at record levels.

Optimism Without Data

Soper’s forecast of a 2025 housing boom appears to rest on tenuous assumptions.

He cites declining interest rates as a key catalyst, but mortgage rates remain much higher than Canadians have been accustomed to in the previous decade.

Moreover, Soper's commentary largely ignores the broader macroeconomic backdrop. With inflationary pressures persisting, unemployment rising, and policymakers grappling with existing housing unaffordability, many factors are at play, and rates aren’t guaranteed to fall significantly in 2025.

His analysis, while spirited, leans more on anecdotal optimism than empirical rigour.

The Bigger Picture

Toronto’s real estate market will likely see renewed activity as interest rates ease, but the notion of an unbridled boom is premature. Soper comes across like a salesman trying to push product rather than a seasoned professional proving trusted advice.

Housing demand may rebound, and mortgage rates may fall, but there is a huge pipeline of homes under construction, and a high share of rentals in Toronto are cashflow negative. Some are cash flow negative and have negative or no equity.

Also, remember that Toronto is experiencing unusually high levels of active listings (supply).

While Toronto may inch closer to Vancouver in terms of property values, a seismic shift in relative market standings is very improbable.

Soper’s vision of Toronto as the priciest city in Canada may serve as a compelling soundbite, but reality suggests a more measured trajectory. Toronto will remain expensive, vibrant, and in demand—but not the next Manhattan, nor likely the dethroner of Vancouver.