With interest rates at historic lows, buyers continue to scramble to get into the market before homeownership is no longer within reach. And with inventory in the Greater Toronto Area at its lowest levels in at least a decade in June, the average price for detached homes continues to soar.
Case in point, you now need at least $1 million to buy a detached home across 97% of the GTA, even in cities far from downtown, as a result of inventory constraints that propelled demand to new heights throughout the area, according to a Re/MAX analysis of the Toronto Regional Real Estate Board’s (TRREB) territory.
With 11,297 active listings, June saw the lowest level of listings in at least a decade, dropping 35% from the 10-year average of 17,260 and surpassing the previous low of 12,327 reported in June of 2016.
Subsequently, the average price for single-detached homes continuing to soar, with values in almost 97% of TRREB communities well-ahead of year-ago levels, with nearly half reporting an increase of 25% or more compared to the same period in 2020.
READ: Canadian Home Sales Continued Cooling in July as New Inventory Sits at Record Low
According to the report, titled GTA Hot Pocket Communities, in terms of year-over-year price appreciation, price growth for detached homes throughout the GTA ranged from an average of $1,314,265 (up 34.2% from $979,646 in 2020) in Halton Region's Milton to a high of $1,365,983 (up 46.4% from $933,368) in Durham Region's Uxbridge this year.
Among 60 TRREB areas, only six had detached home prices that averaged under $1 million -- mostly in further-flung communities such as Georgina, Oshawa, and Brock, where prices sit at $861,902, $855,067, and $773,061, respectively. The number of under-$1-million neighbourhoods was down from 28 in 2019 and 18 last year.
"Halfway into 2021 and the Greater Toronto housing market continues to fire on all cylinders,” says Christopher Alexander, Senior Vice President of RE/MAX Canada.
“Overall home sales topped 70,000 between January and June, the strongest first half in the history of the Toronto Regional Real Estate Board, while values smashed through record levels set in previous years. Without a serious influx of new listings to ease the upward pressure on pricing in the coming months, the market will likely continue on this upward trajectory,” said Alexander.
Unsurprisingly, across the board, rising detached home prices were accompanied by a significant increase in sales volume between January and June of this year.
Compared to the same period last year, unit sales more than doubled in York Region (109.6%), while Peel and Central Toronto posted notable gains of 98.2% and 96.7%, respectively.
READ: “We Have Yet to See Peak Prices”: Can Canadian Homebuyers Keep Up?
Asif Khan, owner of RE/MAX Prime Properties in Markham, explained to STOREYS that the York Region has seen a shift in preferred housing types during the first six months of the year.
"Before we'd sell 35-30 condos, especially in the big three areas of the York Region, which includes Markham, Vaughan, and Richmond Hill, but we've seen that scale back, and that demand has gone into the detached sector. The average price for a home right now is crazy, and around $1.2 million and the detached sector is driving that," said Khan.
Khan explained that many people are move-over buyers from downtown moving to the York Region, which is further driving both demand and prices higher. As a result, the average price for a home in the area hit $1,263,068 in July -- a 17.2% year-over-year increase.
"With more people working from home, the traditional boundaries of where to live in proximity to work aren't there as people don't need to be as close to work anymore. We've also seen an increase in people moving to the northern parts of the region, including in East Gwillimbury and Georgina. People aren't afraid to test those boundaries and move further north," said Khan.
It's not just York Region that's seeing sales boosted by homebuyers who are “trading up” and are likely behind the push for housing in communities bordering on the 416-area code. Pickering in Durham and Mississauga and Brampton in Peel, have also experienced a "serious uptick" in sales in the first half of the year, compared to one year ago, according to the report.
While the demand for larger detached homes has always been there -- the pandemic has only accelerated it -- Khan says with demand up, average prices are rising higher because of the lack of supply.
"It's not that there's none, but the supply that is coming to the market is absorbed really quickly. For a detached home, it's not uncommon to now see 15 offers while before you would see maybe five. That's the major contributor to the skyrocketing prices," added Khan.
With the busy fall market looming, Khan says the next few months promise to be very active in York Region. "There's not a lot of new inventory. There are only 1700 total listings available in the market, and there's a very low supply vs. demand ratio," he said.
However, he found reassurance in the City of Markham's recent announcement that it will now offer builders 25% off parkland contributions.
"Not only will this really help builders in terms of budgeting and hopefully get them building again, but it will also help with inventory," said Khan, adding, "while it's a year or so out, it's good to know there's a light at the end of the tunnel."
