9 Facts About the Average Cost of Living in Toronto

Torontonians might constantly complain about this city, but Toronto is one of the greatest cities in the world. It is why people keep coming to this metropolitan juggernaut. If it were as terrible as some people make it out to be, you would not have people engaged in monumental bidding wars. There is a reason why the average cost of living in Toronto is constantly rising, and it’s because the demand to live in this city is so high.

Due to the rising cost of living in Toronto, many people are incrementally being priced out of the city. You may have been born here, spent most of your life here, and got an education, a job, and a significant other here. Unfortunately, it has become too expensive for the average person to stay.

But why is the average cost of living in Toronto so high anyway? It can’t be because of the dozen or so Tim Hortons from Yonge and Eglinton to Yonge and Bloor! There are many different factors at play here.

Here are nine facts about the average cost of living in Toronto:

1. Toronto economy

A lot of Canadians may not like the idea, but Toronto is the financial capital of the Great White North. While Canada is a vast country, most of the wealth is concentrated in a few small parts of the nation, including Toronto. When a large company relocates headquarters or establishes a new commercial space, it will inevitably pick Toronto as its first destination.

Since all the money is there, the stakes are high and the average cost of living in Toronto is even higher. Plus, if you examine population numbers, Ontario houses about half of the nation’s population.

2. Utility costs in Toronto

The average cost of living in Toronto has been rising due to its utility costs. Over the last decade, every Torontonian has witnessed the dramatic jump in energy prices. This explains why many apartment buildings are now making sure new tenants pay hydro.

So, when hydro goes up, the cost of living usually goes up, too. If you own a home, you are experiencing a massive spike in utilities. If you rent an apartment, you still spend more every month on hydro and potentially water and gas – if it is including your rent, then consider yourself lucky!

3. New developments in Toronto

Every single part of The Big Smoke is witnessing new development. From Parkdale to Leaside, you cannot walk a few blocks in Toronto without seeing a new condominium being built, a new house being constructed, or a mix-use space being erected. It is especially amazing when you compare the skyline of the city from just a decade or two ago.

When new development happens, the costs of everything else increases. You also have the impact of gentrification, which has both advantages and disadvantages. One of the bigger stories of gentrification in Toronto is occurring in Parkdale (around Lansdowne and Queen). It used to be the place for low-income residents to find cheap rent. Today, it is now a middle-class extension of the downtown core and everything is being renovated and transformed.

At the same time, the poor have been kicked out and businesses are raising prices. You decide if this is a good thing or a bad thing, but new development makes everything else more expensive.

4. Foreign investment in Toronto

Foreign capital is prevalent in Canada’s major urban centres, such as Vancouver and Toronto. It is unlikely to find tens of millions of dollars from Hong Kong, China, or Japan in North Bay, Ontario or Brandon, Manitoba. So, to hide their money or to invest in speculation, a lot of money overseas is going into real estate in the hot markets of Canada.

Although this only impacts around four to 11 percent of the real estate industry, that is potentially tens of thousands of living spaces unavailable to people who live in the city. With little supply and a huge demand, the ripple effect is a higher cost of living in Toronto.

5. Supply and demand in Toronto

Understanding the average cost of living in Toronto depends on a simple explanation of supply and demand. This is a fundamental economic principle that explains everything about the marketplace, including Toronto’s situation.

As noted in the previous points, there is a huge demand to live in Toronto, but the supply cannot catch up. Is there a lot of speculation? No doubt. However, when the population of the city perpetually jumps, you know that the demand will continue to go up. Indeed, more condominiums are being developed, and even apartment complexes are being built thanks to the removal of rent controls on new buildings, but they may not be enough to sustain demand.

6. Expenses in Toronto

If you want to lower the cost of living in Toronto, you will have to cut some of your expenses. Sorry, it is time to ditch your morning ritual at Starbucks. You cannot go to the Varsity Cinema at Yonge and Bloor on a Friday night anymore. Say goodbye to your weekly trips to Bloor Street Market.

You will now need to slash your daily, weekly, and monthly expenses. Everyone deserves to be treated, but if you are struggling to get by, you have no other alternative but to limit your spending – unless you follow the new norm and welcome four roommates into your two-bedroom flat.

7. Job opportunities in Toronto

Even though the cost of living in Toronto is high, this is offset by the fact that you have many job opportunities in the city. Driving an Uber, delivering with Door Dash, freelance writing – you might need to find a side hustle to keep up with the skyrocketing living costs happening in The Six.

While you should not quit your day job, your supplemental income may eventually turn into a massive increase in monthly income.

8. Real estate market in Toronto

It is no surprise that the Toronto real estate market is booming in recent years. If you bought a house a year ago as part of a speculative bet, then you may not have experienced much of a return.

Many homebuyers are seeing gains on their purchases, but the real appreciation happened when you bought in 2010, 2013, and 2016. Therefore, just because your friend recorded a six-figure profit on a bungalow in Leslieville, it doesn’t mean you should join in on the fun.

9. Rental market in Toronto

Are you living inside a rental unit that you moved into seven years ago? Here is a bit of advice: Never leave! You need to stay there for as long as you can, no matter how small the apartment is or how dilapidated the building is. Indeed, if you rented an apartment in 2010 with all utilities included, an air conditioner, a dishwasher, and cheap rent, why would you ever leave? That’s paradise!