Increased interest in smaller urban areas, less value attached to parking spots and the rise of non-traditional homes. 2020 is going to see some interesting changes in real estate!
We’ve spent some time thinking through what we think this year will bring to real estate in the GTA and here’s where we put it down in writing.
Live where you want, not where you work.
The concept of remote work, where you do your job from a location other than the corporate office, has moved from hot topic to common place. It’s difficult to find concrete, recent statistics on the number of Canadians who work remotely but a March, 2017 survey by Benefits Canada showed 47% of Canadian employees work remotely for half the week or more.
A CBC article on telecommuting referencing a Statistics Canada report from 2010 (yes, that’s the latest data!) that showed 1.7M Canadians work from home, and that doesn’t include self-employed individuals.
The rise of fast, cheap internet connectivity, combined with more and more virtual services and affordable technology means that the traditional resources of a corporate office are no longer the biggest impediment to working remotely.
Regardless of the exact number, the ability to work remotely means that what has traditionally been one of the biggest considerations for where you live – proximity to your job – is no longer important to remote workers.
The impact of this on real estate will be the fall of employer driven demand in an area. Real estate that is primarily valuable due to its proximity to an employer has always been vulnerable to a change in employment. Stories abound of single industry towns or areas where the closing of a plant, factory or business resulted in a mini-real estate crash in that area.
For those businesses where remote work is a possibility – allowing companies to forego expensive office space while at the same time giving employees the option of not commuting to work – we can see it impacting the demand for real estate in close proximity to the employer.
While it is unlikely that a downtown core with substantial entertainment and social activities will become a ghost-town, areas where there isn’t much to do except work may see less demand in 2020 and beyond. We’re predicting that in 2020 more and more home buyers will be choosing where they live based on what they like about the home and the area, not how close it is to their job.
As employees choose where to work, areas that provide a high quality of life will be appealing to remote workers. Amenities, parks, social services – all of these things will continue to be highly attractive to home buyers who don’t need to worry about commuting to work. This means smaller urban areas that have some of amenities buyers want without the high real estate prices of major urban centres should do quite well in 2020.
Travelling around the city means a service, not a product.
On the topic of commuting, we’re predicting we will continue to see changes that put downward pressure on the value of parking spots in the urban areas of the GTA.
While remote work is one factor that will influence the need and therefore value of parking, we’re also continuing to see affordable, viable alternatives to owning a car. The availability of Uber in most parts of the GTA means that the cost of private car service is substantially lower now than in the days of taxi cabs.
As importantly, it is convenient and quick and calling an Uber doesn’t actually involve the old school idea of actually having to phone to find out availability and cost for a trip. Simply use the app and you’ll know when you can get there and how much it will cost. One of the traditional reasons for owning a car (and therefore needing parking) was the convenience of having your own vehicle at your beck and call. While it still may be the most convenient, ride apps like Uber have narrowed the gap significantly. When you factor in the cost savings for a car purchase or lease, gas and insurance, a number of people are choosing to not buy a car. There’s even calculators online to help you make the decision.
In addition to car services, we’ve also seen the rise of car-sharing services, where you use a car as and when you need it. As of the start of 2018, Canada has 20 car sharing services with more than 336,000 members and over 5,000 vehicles. The folks at Movmi have a good summary of the options out there.
It’s certainly true that these car-sharing services require a certain level of use and therefore population density, which means that they are much more feasible in high density urban centres. Given the GTA is one of the most densely populated areas in Canada, we’re predicting car-sharing continuing to grow in popularity in 2020.
As with private car services like Uber, car-sharing means that the traditional need for a parking space for your car to sit in when you don’t need it is becoming less common. It is impacting real estate in that the value of a parking spot decreases as there is less demand.
Lots of parking spot sales are done privately, so it’s hard to find statistics to see how prices are changing. In 2019, we saw 38 parking spots sold in Toronto via Realtors on the MLS system. That’s compared to 41 in 2018 and 2017 and 47 sales in 2016.
One of the sales in 2017 was for a parking spot at 16 Yonge Street for $33,000. A parking spot in the same building sold for $29,000 in 2012, so prices haven’t increased much in that five year period.
While hard data on the value of parking spots is hard to find, we recently had a discussion within our brokerage on the topic and there was a general consensus that it isn’t nearly as crucial an issue now as it was in previous years.
The implication for home owners or home buyers is that depending on parking as a very desirable attribute for your home is not likely a wise move in 2020 and beyond. While self-driving cars may still be a few years from being more than a curiosity, when they arrive in force, they will absolutely continue this trend of parking outside your home or in your building being less of a selling feature than it used to be in the past.
Homes designed around what we want, not what we used to want.
Finally, we’re predicting that new builds will start to deviate from the traditional layout and features that we’ve seen in our housing stock.
Much like sitting rooms in century homes have struggled to be repurposed for our current society, changes in how we live now will be reflected in the homes that do well in 2020. With affordable computers and digitizing options to avoid or get rid of paper, the need for designated home office space and storage is fading. Multi-purpose rooms that can be a work space for an afternoon and a den or spare bedroom in the evening appeal to buyers looking to do more with less space.
New condo buildings will be the most prevalent housing type that show design based on what people do now versus what used to be done. Communal options within buildings for more social activities (common rooms, party rooms, rooftop decks and pools) allow personal living spaces to be more focused on singles or couples rather than groups.
The changing demographics within our society will also continue to impact what housing stock is popular in 2020. Homes that feature lots of stairs, such as stacked townhouses, are fundamentally unsuited to seniors. Flats and bungalows with all features located on one floor will be popular with aging baby boomers and we’ll likely see some innovative options around how to repurpose second floors or basements which have less appeal as primary living spaces.
Multi-generational housing may see a resurgence in 2020, as adult children of seniors strive to find living solutions for aged parents that help maintain independence while providing necessary support and familial connections. Homes that are designed to accommodate such needs, such as same floor suites, will do well in 2020. Think less about nanny suites and more about nana suites.