Toronto is growing so fast that Niagara Falls, NY is on the brink of rapid gentrification that is likely to triple the value of the City’s lexceptionally low-cost housing stock over the next ten years. The catalyst for it all is the newfound prospect of cross-border transit connectivity with Toronto’s Union Station.
The City of Toronto proper is the fastest growing city in North America — by a wide margin — and the Greater Toronto Area (‘the GTA’) is the second-fastest-growing metropolitan statistical area in North America, only narrowly outpaced by Dallas-Fort Worth.
While Dallas is a relatively affordable place to live with its sprawling suburbs and web of freeways, Toronto suffers a wild and rapidly escalating affordability crisis, driven largely by the confluence of massive influxes of new immigrants and strict land use and zoning laws.
Add to that a booming innovation economy, and rents are skyrocketing like never seen before. Tech jobs are growing faster in the GTA than in Silicon Valley, and though the Bay area still boasts higher salaries, it’s now commonplace for programmers’ starting salaries to exceed $120,000 in Toronto.
The tech sector grew by 16.6% in 2018, according to industry reports.
There are so many new immigrants to the City of Toronto that many longtime Torontonians are moving further and further out into the region’s dense urban periphery, and prices of homes in the rural hinterland are even soaring.
Last year, the number of home sales in the Greater Toronto Area increased by 12.6% compared to 2018. The average sales price for the 2019 calendar year was C$819,319 (about US$630,000), up 4% compared to $787,856 in 2018. Single-family, detached homes average C$1.05 million, compared to condo apartments with an average price of C$612,464.
In 2019, the Greater Toronto Area had 3,531 homes newly added to the market, down 18.1% from 2018. The total active listings declined 35.2% year-over-year to 7,406, as the region’s housing shortage becomes increasingly tight.
What does Toronto’s boom mean for Niagara Falls residents?
For decades, the City of Niagara Falls has been known for the most affordable housing and cheapest rents in Western New York. Over the course of the past decade, rents in and around the City of Buffalo have experienced remarkable growth — making the Falls’ rents look remarkably inexpensive as they stagnated over the same period of time.
A Niagara Falls businessman believes now is the time for City’s residents to buy — when home prices are still exceptionally affordable — or prepare to be priced out of the city in five to ten years’ time. Mortgage interest rates are lower now than they are going to be for a long time, he warns.
“Niagara Falls is on the brink of gentrification, and it won’t be slow and steady the way that Buffalo has experienced it,” explains a Niagara Falls businessman who has renovated a number of properties into local Airbnb venues in the City’s South End. If the GO Train extends to the American side of the Falls, he plans to invest heavily in restoring dilapidated turn of the century single-family homes in the City’s North End as well.
Most of that demand for new housing is a result of the Greater Toronto Area’s remarkable housing shortage and an extraordinary affordability crisis that’s swept Canada — largely at the confluence of tight land use and zoning laws, high-volume immigration policies, and a strong economy.
“Extending Toronto’s GO Train to Niagara Falls, NY is going to be the match that sparks an extraordinary fire,” he explains. “When folks can commute to downtown Toronto under two hours, and the creative class discovers our affordable our cost of living, Main Street in Niagara Falls is going to feel more Canadian than it feels like Niagara County.”
The starting price of a two-bedroom apartment in downtown Toronto is well over $2,500, and one-bedrooms start at $2,100. Prime spots downtown and units with waterfront views fetch multiples of that.
“Western New York developers are ecstatic to get $1,400 for a one-bedroom and $1,800 for a two-bedroom. The economics are such that developers and prospective Canadian renters are both excited at that price point. Studio apartments for Canadian students and artists would sell like hotcakes at $800 to $1,000 a month,” he predicts.
In order to satiate that demand, many economic development officials have been calling on New York State to expand it’s wildly successful Historic Preservation Tax Credit and to reserve those new funds for exclusive use inside the City of Niagara Falls. Funding the credits at $60 to $80 million annually would transform the City’s historic residential neighborhoods in five to six years.
The business community in Niagara Falls has never been as optimistic about the economic opportunity in residential housing, but many business people are quick to warn City residents who are currently renting to very quickly purchase a home in the city — within the current calendar year.
“If you wait until 2021 to buy a house, prices are going to be 10% higher and, even more importantly, interest rates could be a full percent higher or more. Purchase a property before prices begin to skyrocket because renters are likely to be pushed into the suburbs,” explains one micro-developer who has raised more than $1 million to begin flipping properties off of Main Street. “And if you live in the suburbs, consider flipping property in the city, because the economic opportunity can be broadly enjoyed by even small scale investors.”
While some in the African American community voice concerns about rising home prices, others see it as an enormous opportunity for Black homeowners and others to cultivate long term wealth through homeownership and appreciating property values.
“Buying a home is the very best investment opportunity that the average Niagara Falls resident can invest in,” explains one Pine Avenue restauranteur who has been waiting for an opportunity to invest in the city’s comeback. He is excited that even smaller-scale investors can lead the way. “Buy now, and you’ll triple your money in ten years. That’s especially true with today’s low mortgage rates.”
Main Street and Whirlpool Drive could emerge as high-density pedestrian corridors lined with stacks of luxury one- and two-bedroom units, with underground parking for residents and storefront amenities lining nicely refurbished and tree-lined streetscapes. Because of its close proximity to the train station, residents would have access to a commute to downtown Toronto in under two hours.
There is enormous value in the historic architecture of Niagara Falls’ single- and multi-family housing stock, it’s front porches and intimately scaled (relatively leafy) neighborhoods, urban planners often argue. Much of that housing stock will be restored through market forces — and perhaps accelerated through an expansion of the State’s historic preservation tax credit, which has proven effective in attracting investment in Buffalo.
Residential rents will be priced by the market in relation to two proximities — proximity to the train station and proximity to the waterfront.
“Transit connectivity to downtown Toronto — in under two hours — will be the catalyst for it all,” one developer who owns property downtown. “With a critical mass of Canadian commuters, a direct non-stop train to Union station would be a quick hour and twenty minutes.”