In a city already notorious for its unforgiving real estate market, few would have predicted that the quiet, dust-covered work of renovations and teardowns could be the catalyst for Toronto’s latest surge in home prices. And yet, as the report from Re/Max Canada reveals, billions funneled into home upgrades during the pandemic didn’t just tweak aesthetics—they transformed the entire market.

Consider the humble wartime bungalow, once a modest feature of Toronto’s residential landscape, now the prime target for demolition. On these parcels of land, grand custom homes sprout in their place, bringing with them not just bricks and mortar, but a gentrification wave that alters both the physical and financial landscape. The Re/Max report identifies this movement as a key driver behind the astounding 35 per cent rise in the price of detached homes from December 2019 to December 2023, with the average price soaring from $1.05 million to $1.4 million. Toronto, like Vancouver, has seen a transformation that cuts deeper than mere supply and demand.

The statistics paint a stark picture. From 2019 to 2023, renovation spending alone in Canada surged by nearly $300 billion—an 8 per cent jump from the previous period. These renovations weren’t just about new kitchen counters or fresh coats of paint. They involved extensive alterations, equipment upgrades, and additions, each one subtly contributing to the larger inflation of housing values. As the Re/Max report succinctly put it, “renovation and infill activity is raising the average price of homes one property at a time.”

This revitalization, though hardly a front-page topic, has done something remarkable: it’s redefined entire neighbourhoods. Once quaint stretches of homes in places like East York and Riverdale are now evolving into enclaves of wealth and exclusivity. The metamorphosis is unmistakable as builders and homeowners seek to maximize scarce land, driving up square footage, density, and inevitably, prices.

Look closer, though, and you’ll find another layer to this narrative. The pandemic didn’t just change the way people viewed their homes—it changed how they used them. The report flags an increasing trend of turning single-family homes into multiplexes. Faced with multi-generational living arrangements or the need for supplementary rental income, homeowners are transforming what were once traditional homes into revenue-generating properties. In a market this tight, such adaptations are often born out of necessity. As detached homes grow rarer, these new builds, with their distinct and sharper lines, quietly ripple across the housing market.

In contrast, as single-family homes get taller and sleeker, the city’s focus shifts ever more towards high-density developments. While residential building permits for single-family dwellings in Toronto and Vancouver have dropped by nearly 24 per cent between 2019 and 2023, permits for multi-family dwellings have shot up by 60 per cent in the same period. The trend is clear: the future of Toronto real estate lies in the skies, as developers seek to stretch every square inch of land to its limit.

Yet amidst all this transformation, one thing remains unchanged—scarcity. Toronto’s housing landscape is becoming increasingly defined by its lack of available land. Re/Max Canada’s president, Christopher Alexander, astutely points out that single-detached homes are now “quickly becoming a unicorn.” The once-ubiquitous Toronto dream of owning a standalone home with a backyard is rapidly slipping into a bygone era. And as demand intensifies, those already holding property cards will renovate, build, and ultimately, drive the market even higher.

With approximately 30 per cent of GTA’s housing stock built before 1960, the city’s housing fabric is undergoing a monumental shift. Infill and renovation aren’t temporary trends—they are the future. The places once called home by first-time buyers, young families, and retirees alike, are now playgrounds for investors, developers, and those looking to capitalize on rising values.

But as these new custom builds rise from the ashes of wartime bungalows, they bring with them new shops, restaurants, and commercial interests, further stimulating the value of neighbourhoods. Tim Syrianos, principal broker at Re/Max Ultimate Realty, points out the knock-on effect of these developments: “With enhanced property values come new commercial ventures, as shops and amenities emerge to cater to the wealthier residents moving in.” The invisible hand of the market isn’t so invisible after all.

The transformation of neighbourhoods like Trinity-Bellwoods, Parkdale, and Leslieville has only just begun. The urban core, once a bastion of affordability and community, is being polished, made denser, and rendered unaffordable to all but the most prosperous. The question is: how long will it last?

In a city where land is at a premium, and the detached home is becoming a rarity, the renovation boom isn’t merely cosmetic. It’s a tectonic shift, altering the very DNA of Toronto’s housing market. And as with any transformation of this scale, the consequences—both intended and unintended—are likely to reverberate for decades to come.