Musings from a cocktail bar in Yorkville, Toronto.
Where do you go for accurate information on local Real Estate? When I say local, I mean Durham Region. It is challenging to wade through the dozens of articles that lead with shocking headlines, only to be followed up with questionable journalism. Here is an example:
Reuters – “Suburbs vs. Downtown. Toronto’s mixed housing market may signal coming trend.” This article, published 3 weeks ago was using year-over-year data from 3 months ago. This is an example as to why it’s difficult to find relevant, current information giving a true picture of the market today. Let’s dig in to see what exactly is happening.
The idea for this post came from reading a few articles suggesting that the suburbs around the city of Toronto would fall faster and harder than Toronto. What I believe is being implied, is that Toronto, being the crown jewel of Ontario will always rise in value faster and withstand values declining better than the suburbs. I can just imagine a table in a posh Yorkville café with people dissing Durham Region. Looking down at their prices skyrocketing and bemoaning the fact that the values have outpaced Toronto, thinking that they must fall at some point. I mean honestly, the suburbs can’t do better than downtown. Or can they?
Here in Durham Region, we have seen many Buyers move from the west side of Toronto to find affordable homes. One reason is price. Currently, the average detached home in Durham Region is $389,000 cheaper than one in Mississauga. If you look at Oshawa, the difference in average price is a whopping $625,000! Any way you look at it, Durham Region prices are a bargain for west end Buyers.
However, we have seen values drop across the GTA from east to west. Back to that café, at that same table in Yorkville, on their second cocktail, thinking that the values must be falling far faster in Oshawa than their coveted town. This is how the values are playing out to show exactly what is going on. Below are average prices, comparing the end of May, month to date, and how much the values have dropped in 4 different communities.
Brampton:
Average price May/22 $1,355,000
June 13/22 $1,218.000
Drop in value $137,000. (-10%)
Mississauga:
Average price May/22 $1,678,000
June 13/22 $1,497.000
Drop in value $181,000. (-11%)
City of Toronto:
Average price May/22 $2,918,000
June 13/22 $2,570,000
Drop in value $348,000. (-12%)
Durham Region:
Average price May/22 $1,094,000
June 13/22 $1,011,000
Drop in value $83,000 (-7.6%)
As you can see the area that has declined the least in value, is Durham Region. In fact, Oshawa has only seen a 2% decrease in values. The hardest hit area is Toronto with a decrease of $348,000! Reading between the lines it is easy to draw some conclusions from the numbers. First, it makes sense that as the city of Toronto becomes more affordable, and with many companies requiring their employees to return to downtown offices, we may see homeowners move from the suburbs back downtown. The second result quite possibly may be that the Buyers who reside in Brampton and Mississauga will continue to move to Durham and take advantage of the lower prices.
We saw the first mortgage rate increase on March/22, meaning that any Buyers who had rate guarantees will have either purchased or lost the lower rates (the average rate lock for a pre-approval is 90 days.) Since the beginning of the year, the Bank of Canada has increased its prime lending rate from .25% to 1.5%. This has caused mortgage rates to increase from about 3% to over 5% (for a 5-year fixed term) This will no doubt have an impact on some segments of the market with affordability being knocked down to a point where some Buyers may hold off. As 2022 unfolds, I feel that the lower priced homes will continue to be in high demand, and homes over the $1,000,000 mark, where Buyers tend to have larger down payments, will continue to sell quickly. A group of Buyers that have cooled a little are the investors, as the rates increase will make some properties to expensive to carry.
I would love to end on a personal note. Last night one of our team members had a Buyer offering on a home in Bowmanville. She ended up being one of 13 offers. (The home was listed in the mid $600,000 range and we were not the winners.) The market is still moving quickly if a home is beautiful, in a good location, and priced realistically.