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Real Estate

Toronto Housing Bubble Shrinking Talent Pool

Businesses are not keeping up with the knock-on effects of skyrocketing housing prices. Where will new junior employees come from?

I recently hired two people to join my team, which is domiciled in Toronto. Both of my new employees live miles and miles away from the GTA. One jetted to Montreal when the pandemic started, and honestly I don’t know if he’s coming back.

Who can blame them? These are well-paid individuals, but who can afford to live in Hog Town? Certainly not people in the early stages of their career.

And those that do live in the GTA require a premium to make it all work. Wage growth overall has fallen behind housing price increases, but those in demand can hold out for higher wages. Want a highly-skilled Toronto employee? Then better be prepared to pay Toronto wages! Of course, it doesn’t work that way for all. Low-skilled workers are sharing apartments and living with their parents, as Toronto is now a city that is only accessible to the wealthy.

It’s a sad state of affairs. But one to which employers must adapt.

Highly skilled people are moving further and further away from the Big Smoke, simply because – even with decent wages – they can’t afford to live in Toronto.

If Toronto is to remain a business hub, three things must happen: 1) housing stock must increase to dampen housing price appreciation, 2) demand from speculators and money launderers must be squashed, 3) regional transit must improve to allow suburban dwellers to quickly commute to the city, 4) companies must embrace remote working beyond the pandemic, 5) companies must decentralize head office work by setting up offices across a wider region and 6) companies must raise wages to attract talent that is leaving for cheaper cities.

Hiring skilled employees is a highly competitive marketplace. If a prospect has multiple options, they will go with the company that is more flexible and willing to let them work from a location that doesn’t put them in debt for several lifetimes or pays them a premium for coming into a Toronto office.

Many companies are dealing with this problem by shoving their heads in the sand. Executives don’t realize how big this issues is because they tend to hire more senior employees earning $150,000+ salaries who have been on the property ladder for 10+ years.

For middle-managers and supervisors in the trenches, the prospect of hiring a junior-level employee for $55,000 is laughable. Anyone willing and able to accept that salary either lives with their parents or lives 100 miles away. And when a business is able to hire someone at this level – knowing the housing situation at hand – that person will quickly seek to move up the ranks. That means far less loyalty from junior employees than what companies might have seen in the past.

Due to the housing bubble, the war on talent in Toronto has evolved dramatically over the past year or two. Businesses that ignore the problem will lose talent. Businesses that embrace the challenge will become attractive places to work.