By Erika Siegert, Senior Analyst, National Research Insights | October 7, 2020

As many downtown offices remain mostly empty and remote work becomes the new normal, many are left wondering if we will see a mass departure of those living in urban areas in favour of the more spacious and affordable suburbs. With a large part of the workforce still in the dark as to when there might be a return to offices on a regular basis, some urban residents may be weighing the benefits of more affordable housing options in the suburbs, and considering a move out of urban areas. But do lower costs and larger spaces entirely outweigh the benefits and value of a large city centre like downtown Toronto? 

 

Story of the urban exodus

It’s no secret that moving out of the City of Toronto can save a lot of money on housing. According to our new home data for the second quarter of 2020a typical new two-bedroom condominium apartment in the City of Toronto can cost around $1 million, which would buy you a new detached home in Hamilton, Kitchener, or Barrie. Since many pandemic restrictions were lifted in May, we have seen strong demand and sales for townhouse and detached housing in the cities and regions that neighbour Toronto. Is this signaling a generational shift in housing preferences of millennials, or is it a reflection of accelerated decisions to buy outside of Toronto, by those who had already decided to do so, prior to the pandemic? In reality, its likely a bit of both. 

In the most basic sense, the urban area of Toronto offers key attractions for residents – convenience, walkability, better transit, and the abundance of restaurants, retail, and entertainment offerings.  According to Deloitte’s 2020 Millennial Survey, prior to the pandemic, almost 60% of millennials (the largest population demographic in Canada) said that they had increased their use of public transportation / walked or biked more often. Toronto is one of the top three most walkable cities in North Americaa factor that is frequently sought after by residents not only for convenience, but for those that prioritize health, wellness, and sustainability as well. Relocating to the suburbs will likely require longer commutes, the need to invest in a car to get around, and overall reduced access to restaurants and entertainment amenities. 

Pre-pandemic, there has been some evidence that millennials in particular were leaving the largest and most expensive cities in Canada for smaller, more affordable areas, within the same province. However, interprovincial migration data has shown that for every millennial that moves out of a major city like Toronto, an average of eight millennials move in from other parts of the country or abroad.

Moreover, a recent study by Zillow examined extensive housing data in the U.S. from the last six months and determined that there is no evidence to support the urban exodus theory just yet. Although this study was conducted around housing trends in U.S. cities, there is still something to be taken away here – stories that reduce an entire generations activities into binary action miss the complex nature of consumers.  

 

Generational needs are multifaceted 

For some time, we have seen movement to areas outside of Toronto for those who valued more space or a lower price over the urban Toronto lifestyle. Increasingly, places like Hamilton, Kitchener, Waterloo and Guelph are putting more emphasis and capital into attracting younger families, developing walkable urban areas, introducing new restaurantsimproving entertainment amenities, and encouraging more densification overall. The aim is to create mini urban enclaves that provide similar opportunities, amenities, and cultural scenes to parts of Toronto – but this development will not happen overnight.  

Yes, entertainment, retail and restaurant options in the suburbs continue to diversify and expand. Yestransit infrastructure is projected to improve in suburban areas. And yes, the newfound reality of remote work may be enough to attract some people to a suburban lifestyle. However, the choice to abandon urban living depends more on an individual’s current situation than by the sudden acceleration of flexible work opportunities brought about by the pandemic. Those who already wanted to become firsttime home buyers – such as older millennials – may now be more inclined to do so; they may now have the option to work from home, they may want to start a family, or they may want to take advantage of lower prices outside of the city. Additionally, those that fled Toronto’s downtown during the pandemic may have done so as a result of their financial situation, following record high unemployment levels recorded this past May. Still, younger groups may not be as motivated to forfeit the benefits of a city for more space.  

Those who have moved to Toronto for reasons such as career prospects, urban mobility, proximity to entertainment, or arts and culture  have chosen the city for a reason and are unlikely to immediately relocate based solely on the prospect of more living space for a lower price, now that remote work is a possibility. Opportunity, diversity, inclusivity, cultural experiences, creativity, the arts all of these contribute to the sense of community and culture that define a big city. Toronto is attractive not only because of its amenities and walkability, but because it offers a variety of opportunities 

Although the future of work remains uncertain and the pandemic has drastically increased the speed of innovation that will revolutionize the workplace (flexible office designs, remote work, and telecommuting), strong opinions and perspectives on the importance of in-person interaction still exist. This points to a future hybrid model, in which employees will still be required to show up to the office – and many will want to maintain a presence at the office, at least part of the time. Especially when it comes to those early on in their careers, few are likely to be completely satisfied working remotely in the suburbs long-term, and many will crave the level of social interaction and mentorship opportunities that occur in an office environment. Virtual collaboration will undoubtedly continue after the pandemic ends, but human desire to interact face to face, personally communicate, and share experiences will continue the need for physical offices. 

 

The pandemic has accelerated many trends that were already underway in the office and residential sectors and has created new opportunities for consumers to choose where they work and live. However, this shift is not going to suddenly change the lifestyle goals and behaviours of an entire generationIn the short-term, many consumers will take a wait-and-see approach, weighing a confluence of factors – whether their temporary work-from-home will be permanent, if there is a potential for shifts in apartment rental rates in the urban areas, and if a larger, and more affordable home in the suburbs would align with their lifestyle goalsThose whose employment or income has been directly impacted by the pandemic may leave for more affordable options, but a mass exodus to the suburbs is not a realistic outcome. Regardless of market changes, those that value the culture and amenities that Toronto offers are not expected to be running to the suburbs just yet. 

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