Housing in Canada’s largest city continues to be a seven-figure proposition for even an average home, sending more and more people into satellite cities in search of better deals.
The Building Industry and Land Development Association said Thursday that the average new detached home in the Greater Toronto Area reached $1.049 million at the end of March, up 15 per cent from a year earlier. A decade ago, the comparable price for a detached home was $439,294.
In another report out Thursday, Re/Max said the existing home market in cities neighbouring Toronto is getting a huge bump in activity and price — an affect also seen in Vancouver and the surrounding area. Over the past year, average prices have climbed 10 per cent in Hamilton-Burlington and 14 per cent in Barrie.
“People are starting to drive to their affordable mortgage. They drive until they say ‘I can afford to live here,'” said Charlotte Zawada, president of the Kitchener-Waterloo Association of Realtors. March detached home sales climbed 11.2 per cent in her region from a year earlier, while average prices were up 9.2 per cent during the same period.
She says there is migration happening into the region from Toronto, and many realtors in Kitchener-Waterloo are getting referrals from the GTA.
Bryan Tuckey, chief of BILD, said supply constraints — caused, he maintains, by provincial policy — are leading to an imbalance and rising prices. “Our region has record-low levels of new detached homes available for sale, which drives up prices and reduces housing choice for consumers,” he said.
BILD said 905 detached homes sold in March, down nine per cent from a year earlier and three per cent below the 10-year average for the month. As of March 31, there were only 1,634 new detached homes available for sale across the GTA, which compares with inventory of 11,149 detached homes 10 years earlier.
A $1-million average price for new detached home is not something Brian Johnston, chief operating officer of Mattamy Homes, thought he would see in his lifetime, but he says there is just so little product available in the Toronto region, which he is increasingly likening to Vancouver.
“Never, never, never did I though we would get here,” said Johnston, whose firm is also selling homes in the Kitchener region. “The thing is, the same house that we sell in Kitchener is $180,000 less than in Milton (already 40 kilometres west of downtown Toronto).”
Johnston says what is happening is people working in the west end of the GTA will look to the Kitchener-Waterloo region for something affordable with prices starting in the $400,000-range for a townhouse. He says younger multi-ethnic families are moving into the area.
“People want the single family home and the lease-preferred option is the high-rise home,” he said.
Prices in the high-rise market continue to increase, but not nearly as fast. The average price of a new high-rise home increased two per cent from March 2015, to $459,231. On a price-per-square-foot basis, prices were up four per cent during the period, to $582.
Douglas Porter, chief economist with Bank of Montreal, is not sure people will be convinced to make that transition into condominiums instead of the detached home, although some spillover probably saved the high-rise market from collapsing.
“There doesn’t appear to be any surge in supply coming (for detached homes), maybe not even in our lifetime,” Porter said. “I’m not sure the imbalance will ever turn around.”
Porter said government policy might be the only thing that could cool down the market, but noted that since 2008 there have been five separate moves from the federal government to slow the market. He added it’s unclear how a crackdown on foreign ownership of housing, a move some have called for, would impact the market, since the data on overseas ownership are unclear.
Cam Forbes, the general manager and broker of Re/Max Realtron Realty Inc., said demand is actually driving Toronto realtors to look for opportunities in neighbouring municipalities — a situation prompting his brokerage to expand into Newmarket, about 55 kilometres north of Toronto.
“Our greatest growth is in that office,” said Forbes, whose firm has eight locations in the GTA. “For the first time in a long time there really is a shortage of inventory in the 905 (suburbs).”
*Garry Marr, MORTGAGES & REAL ESTATE, April 21, 2016. http://business.financialpost.com/personal-finance/