Affording a house means shopping outside Toronto for many new buyers

George Carras – Toronto Star

The Toronto housing market these days is a study in extremes.

Home-hunters of average means looking for a place to buy have two stark choices: move up, or move out.

In response to the province’s Places to Grow intensification plan, there’s been a fundamental shift toward highrise development, and a corresponding drastic reduction in the amount of houses and townhomes being built across the region.

This shift has had a dramatic impact on the price difference between the two housing types.

Back in January 2005, the RealNet Price Index for a low-rise home in the GTA was $371,426 – a $100,574 premium over the price of a highrise home.

Less than a decade later, in June 2014, the price index set a new record high for low-rise homes at $680,529. It was also a new record-high premium of $243,653 over the price of a highrise home.

For a young couple earning a combined household income of $125,000 – with a $50,000 down payment and traditional mortgage financing – a $500,000 budget will open the door to a range of new-home options.

But they’ll have to either move up or move farther out into the GTA and beyond to the Greater Golden Horseshoe (GGH) to access those purchase options.

Moving up means embracing the concept of raising children in a condo. A two-bedroom unit in the downtown-west area will, on average, comprise 805 square feet and cost $489,000. And it’s only a 20-minute commute to Union Station using the TTC.

A slightly larger two-bedroom-plus-den unit along the Sheppard corridor will be, on average, 911 square feet and cost $457,000. But it’ll take 45 minutes to commute to Union Station on the TTC.

Young house-hunters seeking traditional, ground-oriented homes will have to explore the move-out option.

A townhouse in Brampton will offer 1,858 square feet of space (more than double that of the two previously mentioned Toronto condos) for $433,000. Using GO transit, the commute time to Union Station is 40 minutes.

Farther afield, beyond the GTA and into the GGH, a detached home in Kitchener will provide 2,317 square feet and cost $482,000. But, on the GO system, it’s a two-hour commute to Union Station. Better pack a good book.

Intensification has created an extreme condition in the Toronto housing market. It requires that young families who aspire to own homes make certain choices involving trades-offs: location, commute time, form of housing and amount of space.

These folks will either have to move up, and embrace the concept of urban living and raising a family in a highrise condo.

Or they’ll have to move out, beyond the GTA and into the Greater Golden Horseshoe, and accept long commutes as a part of their everyday life.

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.
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