Skyrocketing prices in urban centres such as Toronto have homebuyers looking elsewhere to get into the market.
With the average residential prices in the Greater Toronto Area reaching a whopping $873,631 in the first quarter of 2017, buyers are heading out of the city to find more reasonably priced homes. As a result, average prices in centres surrounding the GTA are also increasing, as is demand.
In this area, the average price of all residential homes in April increased by 39.7 per cent to $512,656 compared to April 2016. Detached homes sold for an average price of $594,453 an increase of 40.1 per cent.
James Craig, president of the Kitchener Waterloo Real Estate Association, says houses have been flying off the shelves in Waterloo Region, and prices are going up.
“I think one of the biggest things that we have seen is that we are listing just as many homes as we have historically, but the biggest piece that has changed is the demand from people wanting to buy,” he said. “We are listing just as many homes as we normally are, it is just we are seeing the same sort of trends with aggressive offers, selling over asking prices, and lots of Toronto agents and buyers coming to the market.”
He says if the demand is there, residential home prices will continue to increase, and availability would decrease. While they don’t track how many buyers are coming to the region from the GTA, he has definitely seen a trend. What happens in the GTA trickles down into this area’s market.
“We are definitely seeing a major shift since July of last year when we saw this trend start and it just continues. I think it really depends on the demand, to be honest with you. If the demand still continues in those markets, and would push those buyers out of the Toronto market, then we will continue to see this happening,” said Craig. “I think that going forward, we are going to have to keep a close eye on what is happening in Toronto. We’ve heard some media outlets talking about there being a slow down, in terms of not as many parties with multiple offers, and whether that is just people trying to feel out the new housing pool, what effects that may or may not have, it could be a cool down, but the direct correlation to what is happening in the GTA happens our way as well.”
In Vancouver, new real estate taxes have been added to homes, targeting foreign buyers and vacant housing – believed to be part of the reason average home prices were reaching unaffordable levels for the average consumer.
Demand has dropped since the changes were made.
Similar taxes have been added to homes in the GTA, but Craig says there are more exemptions, separating the Toronto area from the changes seen in Vancouver. In Vancouver, average home prices dropped from $1,094,936 in 2016 to $969,900 in 2017 after the new taxes were introduced.
“If you become a citizen within four years, if you are student and can prove a post-secondary institution, there is an exemption. If you are coming to work with a contract, there is an exemption. I think that is what is different,” he said. “I think the focus is on a tax for foreign buyers and that works in conjunction with the tax that the municipalities now have the power to put on vacant lands and vacant properties. I think those two things combined are more to the point, and not as general as what happened in Vancouver. Another thing about the Vancouver taxes is that it only covered the lower mainland. It only covered a specific geographical location.”
