How millennials influence homebuying patterns in the Greater Toronto Area
By Newinhomes on Feb 26, 2019
A recent report from RE/MAX of Ontario-Atlantic Canada says that homebuying activity in the Greater Toronto Area has shifted to the west, but millennials may swing activity back to the east in the near future.
The report focused on nine Toronto Real Estate Board districts, using sales data from 2013 to 2018. One of the largest shifts was in Halton Region (Burlington, Oakville, Halton Hills, and Milton) where market share of residential sales increased 2.3% from 2013 to 10.1% share in 2018. Toronto Central saw an almost 2% increase up to a 18.7% share, while Toronto West jumped slightly by nearly 1% to a 10.5% market share.
"Growing demand for affordable housing buoyed new construction and contributed to rising market share in Halton Region over the five-year period," says Christopher Alexander, Executive Vice President, RE/MAX of Ontario-Atlantic Canada. "Product was coming on-stream at a time when the Greater Toronto Area reported its lowest inventory in years and skyrocketing housing values were raising red flags. Freehold properties in the suburbs farther afield spoke to affordability."
Now let’s look east. In York Region, market share of residential sales fell 3.2% from 2013 to 15% share in 2018. East Toronto market share fell 1.7% to 9.3% share, and Durham and Peel had slightly less dramatic decreases, falling just 0.3% and 0.5%, respectively.
Why is this happening? The east end of the GTA is primarily low-rise housing, but with detached home prices out of reach for many, buyers are flocking to places like Hamilton to buy their highly desired detached home. Or they’re going to Toronto West or Central to buy relatively more affordable condos. Burlington in particular has seen a lot of action over the last five years with the average price jumping 50% to $769,142.
New construction also has something to do with the shift to the west. There were nearly 39,000 housing starts in the Toronto Downtown/Central Waterfront area from 2013 to 2017, while there were another 56,855 active units (in various stages of development). People tend go to where there’s more choice.
So, where do the millennials come into play? As the youngest buying cohort, millennials migrated further west in search of more affordable homes. This has led to the gentrification of areas like the Junction, South Parkdale, Bloorcourt, and Dovercourt Park. The average price of the approximately 8,000 homes sold in Toronto West was $755,658 in 2018.
The report also credits millennials for fuelling home sales activity in Toronto Central, which consists of high-density areas like City Place, King West Village, and Liberty Village. Millennials aren’t the only ones active in the Central area; baby boomers are selling their large low-rise homes and downsizing to condos in more walkable areas.
"Freehold properties remain the choice of most purchasers in Halton Region and Toronto West," says Alexander. "The same is true to a lesser extent in Toronto Central, but condominiums continue to gain ground. Just over one in three properties sold in the GTA was a condominium in 2018 and that figure is higher in the core. As prices climb in both the city and suburbs, the shift toward higher-density housing will continue, with fewer single-detached developments coming to pass."
Simcoe County is another interesting area because young buyers, empty nesters, and retirees are eyeing the region for home purchases. The average price in Simcoe County last year was $611,628, making it one of the more affordable regions, especially with regards to low-rise homes.
The interesting thing is that RE/MAX believes that millennials will replace baby boomers as the “dominant force in the GTA’s real estate market.” So, over the course of 10 years, sales activity will likely shift back to the east as some millennials look to move-up into larger detached homes.
