Michelle Kam Explains the Major Influences on Toronto's Housing Prices

For home buyers and sellers alike, housing prices are an important factor when deciding whether to buy or sell. However, it can be difficult to understand what factors affect prices and therefore what to expect in the future. Several factors work in conjunction to determine fluctuations in price. But what are these factors and how do they affect the housing market?

Michelle Kam is a real estate broker from Toronto, Ontario, with more than a decade of experience in the real estate industry. She sheds light on the many different factors affecting housing prices in Toronto.


Employment income has a significant effect on housing prices due to its impact on demand. In general, increases in income result in greater demand for housing. This increase in demand, in turn, causes prices to increase. However, Michelle Kam notes that, if prices rise at a significantly faster rate than income, then demand will not fluctuate as dramatically.


Over time, the demographics in a region change. Demographic trends are known to impact housing prices as a result of changes in demand for particular types of housing. As people enter new stages in their lives, they require different types of properties. Therefore, a shift in the average age of a population will influence the demand and therefore pricing of housing.

For example, in the Toronto area, Baby Boomers have historically been the majority demographic. As the needs of Baby Boomers begin to change, so does the supply and demand for particular properties. For instance, the demand for smaller, down-sized housing may increase as Baby Boomers age, while the supply of larger homes, that they are now beginning to move away from, increases. Along with these changes in supply and demand comes changes in prices.

In addition, real estate broker Michelle Kam suggests that, as the overall population in a particular area increases, so does the demand for housing in general. An increase in demand, and therefore competition, results in an increase in prices, as buyers compete for desired properties.

The Cost of Borrowing

The ability to borrow and the cost of doing so also significantly impacts housing prices. When mortgage rates are low, Canadians want to buy. This increase in demand is reflected in the pricing of properties. As Michelle Kam points out, as more buyers enter the market, demand increases and with that so do prices. This is also true of lending rules. As lending rules relax and more buyers can purchase homes, demand and prices increase.

Development Costs

Development costs can also impact housing prices. These development costs are directly related to construction expenses which are affected by labour costs, as well as commodity and energy prices. For example, as the cost of energy and commodities like lumber rises, so does the cost to build new developments. In turn, property prices increase. A decrease in the prices of commodities, on the other hand, can help to deflate home prices.

Development costs can also have an impact on prices by affecting supply. As development expenses increase, development may slow and supply is decreased. In response to limited supply, property prices typically increase.

Land Availability

The availability of land can also impact housing prices. Real estate broker Michelle Kam explains that in highly populated areas, where land is limited, prices will be much higher than locations where expansion is unrestricted. Limited supply results in increased competition and therefore an increase in prices.

Current Events

Significant events that occur throughout the world can also have an indirect impact on local housing prices. COVID-19, for example, is a recent event that has created change in Toronto’s housing landscape. Worldwide events like this impact prices by affecting other factors including income, the cost of development, and, therefore, the supply and demand in the market.