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Toronto Real Estate Speculators Causing a GTA Market Bubble? (SURVEY)

There’s been a lot of talk of a “housing bubble” in the Greater Toronto real estate market. Many pundits are talking about speculators – domestic investors fuelling an already overheated market. RE/MAX looked at just over 5,000 individual freehold transactions in the GTA between March 15, 2019 and March 14, 2021 and found that less than 2% of sales were repeated in that time period, leading to the conclusion that speculators are not a significant factor driving the current market and rising prices.

RE/MAX examined home-buying activity in six Greater Toronto Area neighbourhoods – C03, W05, E01, Erin Mills, Aurora and Northwest Ajax – on properties priced between $500,000 and $1,499,999.

Of the 1.58% transactions between March 2019 and March 2021 that were repeat sales, only approximately 20% of these indicated that renovations were made between sales.

Wrong Conditions for Speculators

Investors tend to wait out hot markets, preferring to buy when prices are down and sell when they’re up again. Those who are looking for short-term investment opportunities in the Toronto housing market (and in many other Canadian regional, for that matter) will be hard-pressed to find them under current conditions.

Bully offers and bidding wars are commonplace in the current market, with demand outpacing supply in virtually all areas of the GTA and the winner buyer paying top dollar. The current environment is simply too hot for investors and builders.

There may very well be some investment/speculation occurring in the GTA condo market, as pricing dropped in tandem with condo sales, but investors have always played a role in the condominium market so this isn’t entirely surprising. That’s unlikely to end anytime soon.

RE/MAX Brokers Say Homebuyers Are Not Speculators

RE/MAX brokers in the GTA were clear that there is no speculation in the market at this point. We took our research a step further and conducted an online survey of RE/MAX brokers and agents in Western Canada, Ontario and Atlantic Canada. A landslide 96% confirmed that the majority of homebuyers are end users, while only 4% were classified as speculators. With a freehold market that’s being driven by end users, upward pressure on housing values is often a function of limited supply.

If Not Speculators, Who (Or What) is Driving Toronto Real Estate Prices?

There are many other factors that may be contributing to the dramatic price growth across the Canadian real estate market. Covid-19 prompted a spike in sales of single-detached homes at a time when condominium sales have dipped, and prices of detached homes are traditionally higher than condominiums. We’ve also seen an uptick in the luxury freehold market, with sales over $3 million posting their best year on record in 2020. All of these factors tend to skew prices higher.

To illustrate, this data table depicts the average prices for detached homes and condominiums from January 1-February 28, 2021, according to the Toronto Regional Real Estate Board.

The Market is Self-Regulating

After some concerns of overheating earlier in the year, there has been a shift in the market activity in recent weeks with more detached inventory coming on-stream. In areas north of the 416, the increase in new listings appears to be meeting demand, with fewer bidding wars taking place. Evidence of this can be found in the number of listings that have been cancelled and reintroduced to the market at a higher price point. The 416 also reported growing inventory levels.

Covid-19 fatigue is playing a role as well, with some purchasers taking a step back from the heated market conditions experienced during the second half of 2020 and in the first quarter of 2021.

The Future of Canadian Real Estate

What’s in store for Toronto real estate, and Canada as a whole? While it’s difficult to predict the market with the uncertainty around Covid-19 and the economy, we expect domestic buyers to continue to be active in the market, due to a number of factors.

Interest rates are playing a major role in spurring home-buying activity, as buyers scramble to take advantage. The government is committed to low interest rates until the “economic slack is absorbed.”

Equity gains are inspiring existing homeowners to trade up to larger homes or better neighbourhoods – both in and outside of the city.

Pent-up demand is also a going concern. For every bidding war, there is a handful of disappointed buyers. They’re still out there, and they’re still hoping to buy a home.

Savings have grown year over year, and some purchasers are sitting on a substantial amount of money. With traditional “safe” investment vehicles like GICs yielding next-to-nothing returns, and stock market risks, many are choosing to invest in their principal residence. The Bank of Canada says savings rose to $180 billion in 2020. Statistics Canada says that the household savings rate was at 14.6% in Q3 2020 and economists estimate that figure will be 13% in the Q4 and continue into 2021. To put that number into context, the average savings rate in 2019 was 1.4%.

Strong economic growth is expected as the vaccine rolls out and confidence returns to the market.

Immigration will ramp up, with an anticipated 401,000 new Canadians coming this year, another 411,000 in 2022, and 421,000 more in 2023. The February 13 Express Entry draw invited almost 28,000 candidates to apply for permanent residence.


PR & Content Manager | RE/MAX Canada

Lydia McNutt is an award-winning editor, with more than two decades of experience specializing in Canadian real estate. At RE/MAX, Lydia is responsible for developing consumer-facing content while promoting the RE/MAX brand through housing market reports and market news, as featured on the RE/MAX Canada blog and social media channels. Lydia has been published nationally on topics ranging from real estate, architecture, decor and design, to finance, business, technology, entertainment and lifestyle. When she’s not head-down at her writing desk, Lydia is busy “momming” in Oakville, Ontario, where she lives with her husband, two kids and their chocolate lab, Betty. Email Lydia at

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