A couple of years ago, a real estate market expert told me that condominiums in the Greater Toronto Area were on their way to reaching the point where they would no longer be financially feasible for the masses. He said when that happened, people would look beyond the GTA for condos, even if they had to change jobs or commute longer distances.
Once the home of choice for retirees, condos now attract everyone from first-time buyers to families and empty-nesters, largely because of the exorbitant prices of detached homes. But are we close to that breaking point in Toronto and the GTA? With the benchmark price for new condominium apartments having reached $774,554 in June of this year (Altus Group statistics released by BILD), and typical resale condos hitting $502,400 that month according to the Toronto Real Estate Board (TREB), well, duh!
(As an aside, if my grandmother was still alive and I told her the average price of a condo in Toronto was over half a million dollars, she’d say, “Yer aff yer hide!” – which loosely translated means “Whadya, crazy?”)
I know, I know, most of the new homes sold in June were condos, so people are still finding ways to purchase them. And over the past few years, we’ve seen condos popping up in the 905 areas of the GTA, sometimes in neighbourhoods that hadn’t seen them ever before.
Looking at the Altus Group statistics for June 2018, there were 1,284 new condominiums sold in Toronto, and the total for Durham, Halton, Peel and York Regions (known collectively as the 905 areas) was 795. Obviously, folks choosing to live outside the Toronto city limits are snapping up units for price and/or the kind of lifestyle condos enable – you know, the part about not having to shovel snow or mow the lawn. There is something to be said for that, for sure.
And that makes me think of baby boomers. Recently, Royal LePage conducted a Boomer Trends Survey to find out what this market intends to do about their housing situations. Apparently, these people find big cities unaffordable for retirement. Gee, d’ya think? The stats from the survey show that in Ontario, boomers are most likely to consider downsizing, and nearly half of the respondents said they plan to move into a smaller dwelling.
Ontario boomers are also the most likely to move to other cities for affordability. Let’s face it: retirement savings and pensions are great, and many of these boomers can make a decent buck when they sell their existing homes. But they have to live somewhere, and moving closer to the city probably means they’d make peanuts when all is said and done. That’s not what they planned on, so they might set their sights on going farther out.
Forward-thinking developers are now realizing that there is a demand for condominiums in areas outside of the GTA, such as Barrie, Innisfil and Bradford. That demand, and the need for more condominiums in places even farther from Hollywood North is likely to increase as Toronto and GTA prices continue to rise.
Think Manhattan, where people commute from Connecticut and New Jersey because living in the big city is the realm of the rich and famous. Think Washington, D.C., where people commute from Virginia and Maryland to avoid driving through a maze of roads that are surpassed in complexity and frustration only by the U.S. federal government.
Thing is, condos in Toronto and the GTA are rising out of the financial reach of the masses, just like that expert I spoke to predicted. How far can we be from people commuting from Orillia, Peterborough, Niagara Falls, Kitchener, or even calling it quits and moving to Ottawa? The market in that city is red hot right now. Prices are likely to rise substantially in the not-so-distant future, so folks are getting in while the getting’s good.
I’m just not sure how much more prices in Toronto and the GTA can rise before there’s a major exodus by people of all ages to parts that may be unknown at the moment.
So, the news isn’t great for those who are thinking of entering the housing market as first-time buyers, or even moving here as renters. There is, however, one thing I can tell you that should give you hope: I live in Toronto, and I’m not rich and famous … yet.