The metaverse isn’t just another Bitcoin. It’s not even a recent concept! The metaverse simply describes integrated 3D virtual worlds — imagine games like Roblox or World of Warcraft. These games have been around for decades!

But as technology advances, companies are finding new ways to put the metaverse to use. McKinsey believes that the metaverse could drive physical product sales, reduce the need for physical stores, and enhance in-store experiences. The consulting firm further found that 64% of consumers surveyed were excited about shopping in the metaverse.

This article discusses the metaverse and how it may affect the real estate industry.

What is the metaverse?

The metaverse is any online 3D world where you can interact with others via an avatar. We’re used to metaverses through video games. But companies now want to apply the technology to industries beyond gaming.

For example, instead of using a video conference to meet with someone halfway across the world, you could meet in a metaverse and engage in new ways. Integrate this experience with virtual and/or augmented reality and create a much more immersive experience than just a ZOOM call.

You could also create better digital shopping experiences. Instead of flipping from webpage to webpage, consumers may someday visit virtual malls from the comfort of their homes. Here, people could purchase real-world items in a more mesmerizing shopping experience, and this better user experience could translate to more sales.

The possibilities for the metaverse are endless. And the industry is only beginning. That’s why everyone has high hopes.

Many people are already investing in the metaverse by purchasing land in specific digital universes, hoping that the value of these digital properties will appreciate.

How does buying metaverse land work?

Some metaverses let you purchase unique digital land and other properties. Big names like Snoop Dogg and Steve Aoki already own properties in a metaverse called Sandbox. Decentraland is another popular network where people can purchase unique parcels of land.

Metaverses usually have their own cryptocurrency used as a medium of exchange. Decentraland’s currency is called MANA, for example. To purchase real estate on Decentraland, you ultimately need MANA.

After obtaining the necessary currency, the land purchase process depends on the specific metaverse. Each has its own procedures.

Many assign you an ownership ID to the digital land parcel, similar to an actual deed. Buyers may need to show proof of their real-life ID and address too. Your virtual deed could also come as an NFT.

Like the real world, these properties can be anything from houses to apartments to commercial storefronts. It can also be a plot that you develop into a customized residential or commercial space.

Unlike reality, land in metaverses is infinite. There’s also usually no travel time between two points in a metaverse. In the real world, land scarcity and a property’s location determine a building or land parcel’s value and cause it to appreciate.

A particular area of a metaverse might appreciate for other reasons, however. If you own the digital parcel beside Snoop Dogg, you could expect that that land could fetch a nice premium. High-traffic areas are generally the ones that sell for big dollars.

For example, one parcel of Decentraland land sold for $2.4 million worth of MANA in late 2021. This piece of land was located in the “Fashion Street” area of Decetraland, making it highly valuable. The purchaser, tokens.com, hopes to one day build a virtual shopping centre to sell virtual clothing for digital avatars.

In addition to infinite land, there’s also the potential for infinite metaverses. If Google, Meta, and other large tech companies all started a consumer-targeted metaverse, this could reduce the popularity of Decentraland or Sandbox and then reduce the value of all land there as investors rush to invest in a new metaverse.

Just think of the rise and fall of other websites and networks! You don’t know if your metaverse will be the next MySpace or Tumblr.

How Could the Metaverse Affect Tangible Real Estate?

While the potential for a new way to “invest” in real estate might become viable someday, how can the metaverse affect the real estate we know? One way is through more immersive showings and the ability to meet online in the metaverse.

Realtors currently use many ways to display a property. Photos are the most common. But videos, 3D renderings, and 360-degree cameras are increasing in popularity too.

But imagine a metaverse where potential buyers can walk through online replicas of houses on the market. Suddenly, buyers in foreign locations can view a listing as if they’re there. This could help increase the draw and attraction of a house and encourage more buyers.

Simultaneously, a realtor can take buyers through the property and interact with them in the metaverse as if it was a real-world showing.

The metaverse could also change home buying by giving buyers, sellers, and brokers a place to meet. As a buyer or seller, you may someday have an initial consultation with a realtor in the metaverse when an in-person meeting isn’t viable. Or, suppose you meet your mortgage broker in the metaverse. The ability to show and view facial expressions and body language could help you explain your needs and allow realtors or brokers to reveal how they can help.

The metaverse is not a new technology. But many companies are now trying to apply it to new industries. Buying and selling real estate in the metaverse has significant actual dollar values, though it comes with numerous risks.

For real-world homebuyers and sellers, the metaverse has numerous applications in how we’ll someday view a home or meet with the people who help us in the home purchase or sale process.

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What are A Lenders?

A Lenders, for the most part, are the most prominent financial institutions in Canada that (as part of their many services) are in the business of giving people loans to buy houses. Even if you can’t define A Lenders, you know what they are. They are the largest banks in Canada: Bank of Montreal, CIBC, RBC, TD Bank, National Bank of Canada, and Scotiabank. They are also the largest credit unions in Canada: Vancity, Meridian Credit Union, Desjardins and more.

What makes these lenders rank A is their reputation and demand. When people are looking for a mortgage, the big banks, and to a lesser extent, the big credit unions, are who people go to. Part of that is a feedback loop, as people go to them because they have the capital to do business with a lot of people, partly in turn because so many people go to them.

What also makes them A Lenders is that they are also compliant with the federally mandated Mortgage Stress Test. Even if you don’t need mortgage loan insurance, you must pass the stress test to get a mortgage with an A Lender. To pass the stress test, you need to pass the minimum qualifying, which is the higher of 5.25%, or the rate offered by your lender plus 2%.

Banks are compliant with the stress test because the federal government regulates them. Credit Unions and Caisses Populaires technically do not have to comply with the stress test, as they are regulated by the provinces and not the federal government. However, the large credit unions, A lenders, comply with the stress test by choice. Aside from those seeking a mortgage, you also need to pass the stress test if you already have a mortgage but want to refinance your home, switch to a new lender or take out a home equity line of credit. The Mortgage Qualifier Tool is useful for those wondering whether they qualify for a mortgage from an A Lender.

In short, A Lenders get the rank of A because of their reputation, their capacity to give loans, and the fact they are compliant with the mortgage stress test. They have more red tape to get through – but less risk. If you get a mortgage from an A Lender, you are a “prime borrower.” Things are a bit different for B Lenders.

What are B Lenders?

B Lenders get the rank of B because they are often people’s second choice when they do not qualify for a mortgage from an A Lender. B Lenders typically provide mortgages to people who would not be eligible for an A Lender mortgage because of their income or credit score. B Lenders generally are Credit Unions of Caisse Populaires that do not follow the stress test and Mortgage Finance companies.

For many people, personal circumstances may make getting a mortgage from an A Lender difficult or even impossible. This doesn’t mean that those people are financially irresponsible: life is far more complicated than that. With the Canadian real estate market, those people may have the resources to afford a home, just not under the requirements from A Lenders. B Lenders are not giving out mortgages like free samples at Costco, but they have less stringent requirements than A lenders. For example, most banks, at a minimum, require a credit score of 600 (if not more) to approve people for a mortgage. B Lenders are more willing to give mortgages to those with credit scores below 650. Through the mortgage, they also allow borrowers to build their credit score. Asides from credit scores, B Lenders are more willing to provide mortgages to those with different types of income (A Lenders usually look for a steady, guaranteed income, making things more difficult for the self-employed), those with higher debt ratios or those who have been previously bankrupt.

Of course, because B Lenders are providing mortgages to those who would be considered higher risk (from a lender’s perspective), their interest rates tend to be higher, usually up to 2% compared to A Lenders. They also require a higher down payment than the typical 5%, generally at least 20%. Mortgages from B Lenders may also have higher closing costs. For many people, a B Lender may be an excellent option for those who are refinancing and want to switch from an A Lender to a B Lender.

How to find B Lenders?

Overall, the advantage of a mortgage from a B Lender is that they are more lenient to those who have a poor credit history or non-traditional sources of income. However, the disadvantages are higher down payments and interest rates. One other drawback to B Lenders is that because they are not as well-known as the banks, it can be harder to find more information. However, that’s where the right mortgage broker can provide immense value and find you a suitable B Lender for your situation.

However, beyond seeking a mortgage broker for help, B Lenders are also more common than you think. For instance, A Lenders may also have B Lender Divisions – so if you have a current mortgage at your bank or credit union, you may be able to find a B mortgage at the same institution. Banks dominate the market share of mortgages at 79% of the market, and Credit Unions and Caisses Populaires come in at second at 14% – a decent amount of those institutions have B Lender divisions. At 5%, the third-largest type of mortgage lender is Mortgage Finance Companies, Insurance and Trust Companies, followed by Mortgage Investment Entities at 2%. These institutions are the prototypical B Lender. So yes, B Lenders aren’t on every corner like a CIBC, but they exist, and depending on your situation, it might be worth a look.

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Let’s get into specifics, though – if you want to save for a down payment on a home in either of these cities, what kind of salary do you need? What if you also pay rent and want an average city lifestyle? We’re going to answer these questions and break down Vancouver and Toronto real estate prices.

It’s been no secret that housing sales have been one of the pandemic stories. In the Greater Toronto Area, there remains a strong demand for homeownership. Sales were down year over year for February in 2022 – however, the average selling price for all types of homes was up 27.7% to $1 334 555. For Metro Vancouver, the Real Estate Board of Greater Vancouver represented an 8.1% decrease in home sales year over year for this February. The average price of all homes was $1 313 400, a 20.7% increase from February 2021.

While both markets need more homes, Toronto’s supply might have overtaken Vancouver. In Toronto, fewer new homes are being built than in Vancouver, which has seen a slight increase. The average price of homes in Metro Vancouver and Toronto in February 2022 are listed below:

Conventional mortgages usually require a 20% down payment. So for even the cheapest option on the above table (Toronto apartment), it means $159 993 for only the down payment.

If you want to move to one of these cities to start a family in a detached home, it costs well $1.5 million. A 20% down payment for an average Vancouver detached is around $408 960 and for an average Toronto detached is about $359 440

Now that you know what you need to save for the down payment let’s look at some everyday city-lifestyle expenses.

Because real estate prices aren’t low, rent isn’t either. According to housing rental tech company Zumper, the average cost for a single-room apartment in Vancouver is $2200/month. A two-bedroom apartment is $1550/month (suggesting you have a roommate split the costs). While Toronto has now moved past Vancouver at the price of buying a house, the city is doing better when it comes to renting affordability. In Toronto, a solo lifestyle costs $1900/month and living with a roommate costs $1200/month.

Modern-day necessities like a cell phone and home internet cost around $74/month, while a monthly transit pass costs $100 in Vancouver and $156 in Toronto. And if you’re like most city dwellers, $60 for Ubers and taxis every month can come in handy. Lastly, around $300 for groceries every month is necessary for the days and nights you aren’t eating out. So your monthly necessity expenses should approximate $608 if you’re in Vancouver or $664 if you’re in Toronto.

What about the unessential? If you buy two lunches a week (at $20/lunch) and dine out for dinner twice a week (at approximately $30/dinner before drinks), that’s already $400 a month. And then budget in three $3 coffees a week, and that’s another $36/month. So finally, a fair estimate is $250/month for drinks and entertainment and $170/month for extras (maybe for a trip to the salon or a new pair of loafers?). So your monthly total for non-essentials should approximate $906/month, regardless of the city.

The last item on the list is a gym membership. If the condo gym isn’t cutting it for you or if you want a few specialty classes like cycling or kickboxing, it’s not going to come cheap. The standard gym membership is $60/month. This covers both classes and a more comprehensive range of equipment.

If you tally up the expenses, living in either city in your apartment costs around $3500/month! Living with one roommate costs slightly above $3000 in Vancouver and approximately $2700 in Toronto. This doesn’t include yearly expenses like vacations or Christmas shopping. Additionally, if you have a car or outstanding debts, that’s a whole new budget.

Conclusion

In this scenario, the plan is to go from nothing to a down payment in five years. This is how much you would need to save for the following:

Adding in monthly expenses, buying a Vancouver detached while living alone or a Toronto detached while living with a roommate requires a net annual income of around $104 568-$126 480. To afford a Vancouver apartment while living alone or a Toronto apartment while living with a roommate requires an annual net income of $64 680-$80 244. All scenarios are expensive, but it is essential to keep in mind that a lot can change in 5 years (prices could go down or go up quite a bit).

Other things to consider

Vancouver and Toronto are two very different cities, and the price of a property is only one of many characteristics of each city. Vancouver provides milder weather; there are less extreme hots and colds than Toronto. Vancouver is also great for the outdoorsy people, with Stanley Park only steps away from the city’s core. In contrast, people cite Toronto for better and higher-paying career opportunities. The city is also better known for its restaurants, bars, and nightlife in comparison to its west-coast counterpart.

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It’s no wonder why many people are now relocating to Toronto. And if you’re in this pool of new Torontonians, then this article is perfect to understanding the city and making sure you fit right in. This post details how to get around Toronto and notes the cost of buying and renting a home,  the neighbourhoods and the surrounding suburbs, and a few resources to find out what’s happening in the city.

Getting around

While traffic in Toronto isn’t as bad as Los Angeles or New York City, it’s still not a great place to drive or commute. A study last year concluded that Toronto was the sixth worst city for commuting. However, there are plenty of ways to get through the city, whether that’s public transit, a personal car, or through taxis and ridesharing.

Public Transit

Toronto’s main transit system is called the TTC (Toronto Transit Commission). This includes all subways, streetcars, and busses in Toronto. Once you buy a ticket ($3.25 CDN), you can transfer from one system to another without any additional fees (however, there are additional costs for transferring onto transit systems outside of the TTC).

It’s recommended that you buy a PRESTO card, TTC’s metrocard, as soon as possible. A PRESTO card is not only more convenient than cash, but reduces your ticket fees to $3.10 and provides an unlimited, two-hour transfer. You can also use PRESTO with many of the transit systems of the surrounding suburbs.

While Toronto doesn’t have an extensive subway system like many large American cities do, that doesn’t mean it’s impossible to get around. The subway system is still able to reach the far corners of the city and even to parts of the surrounding suburbs. Where the subway can’t reach, a streetcar or bus will.

Driving, Ridesharing, and Taxis

For those who don’t like public transit or who have unfortunately inconvenient commutes which would take hours by bus or subway, driving may be the best option. Within the Downtown Core, most parking is going to cost you, and most of Midtown and North York will be the same. So make sure to account for parking fees in your budget. It’s also important to familiarize yourself with Toronto’s main freeways such as the Don Valley Parkway, the Gardiner Express, and the 401 Expressway.

Can’t drive or don’t own a car and don’t want to bother with the TTC? There’s a solution for that too. Unlike Vancouver, Uber and Lyft are available in full in Toronto. Both apps use the original, non-subscription-based model, so you can use the apps on a per-ride basis. If you’re from a city that doesn’t allow for ridesharing, make sure to look out for promotional codes, which can provide a fair amount of cash credit. Of course, taxis are also available in Toronto. It’s best to call beforehand than to hail one off the street though.

Home and Rent Prices

Because Toronto is such a hotspot for commerce and tech, it’s no doubt that the real estate is expensive. Housing costs aren’t as hectic as San Francisco or New York City, but a 2019 CRBE report listed Toronto as the 12th most expensive housing market in the world. This still only puts Toronto as the second most expensive housing market in Canada, as Vancouver was awarded 4th place on the list.

The Toronto Real Estate Board provides a monthly market watch newsletter to analyze monthly sales trends and average price. In the most recent May 2019 edition, the average home in Toronto sold for $937, 804 CDN. This includes all types of homes such as detached, semis, townhouses and condo apartments. More specifically, detached homes averaged a selling price of $1,384,993 CDN and condo apartments averaged $642,891 CDN.

Renting is just as bad in Toronto. And despite CRBE listing Vancouver as the most expensive housing market in Canada, Padmapper, found that in May 2019, Toronto had the most expensive apartment rental market in the country. A one-bedroom apartment in May averaged a monthly rent of $2,250 CDN while a two-bedroom apartment averaged $2,850 CDN. These numbers aren’t much of a change from the month prior, but are an 8.2% and 7.5% increase year-over-year respectively.

So if you’re planning to either buy or rent in Toronto, be prepared for some crazy expensive real estate, especially if you’re not from a city that’s used to such high rent and home prices.

Toronto Neighbourhoods and the Greater Toronto Area

Toronto has many neighbourhoods which are grouped into districts. These districts, which include Old Toronto, East York, Etobicoke, North York, Scarborough, and York, are pretty much cities of their own. Commonly, when people mention Toronto, they refer to Old Toronto, which includes the Downtown Core and surrounding areas.

Each district has its own culture, sights, and diversity. Housing prices and public transportation also vary. For example, much of Scarborough isn’t subway accessible! For more details on Toronto neighbourhoods, check out our list of the Top 10 Neighbourhoods in Toronto for Families with Children. 

The Greater-Toronto Area (GTA) includes many of the municipalities right outside of Toronto, including the York, Peel, Halton, and Durham regions. Each region has many municipal cities. Among them is Mississauga, which is actually the 6th largest city in Canada! For those who don’t want the crowded spaces of the main city or who are willing to live further from Toronto in exchange for a cheaper cost of living, then the GTA is the way to go.

Resources for Nearby Events and Local News

The city has no shortage of news to report on and newspapers to report it. Two of the largest newspapers are the Globe and Mail and the Star. These two newspapers run both online and in print. However, they limit the number of viewable articles per month on their website, unless you pay a monthly subscription fee. Both are great sources for traditional news about Toronto. 

Great ways to find the hottest restaurants or what’s happening this weekend are the newer, online-only newspapers like BlogTO. If you’re relocating from Vancouver, DailyHive will be a familiar face that’s also reporting on everything Toronto. For the Montreal kids on the block used to MTL Blog, Toronto also has Narcity.

So welcome to Toronto. The city has much to offer to new residents and there’s plenty to do. Like any city, it has its pros and cons, but it’s a great place to call home.

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