Affordability Remains a Big Concern in the GTA Real Estate Market

It’s long been known that GTA real estate is the most expensive in Ontario. The convenience of living so close to major sporting events and concert venues, as well as the number of high paying jobs available in the city, have long made Toronto and its suburbs a draw for young professionals and established home-owners alike.

However, about a year and a half ago the world drastically changed. Amid back-to-back lockdowns forcing office workers to work from home and children to attend virtual school – also at home – many Canadians began to reassess their lifestyles, particularly those living in dense, crowded urban centres. With remote work being one of the only options for many, having to live close to the office in Downtown Toronto was no longer a necessity; leading many to seek housing in the broader GTA or just outside of it, in cities such as Hamilton and Niagara Falls.

As the demand for housing in small towns and communities skyrocketed, so too did prices, intensifying the affordability crisis that many hopeful homebuyers are grappling with today.

Prices for GTA Real Estate Continuing to Rise

With prospective homebuyers looking to leave the core of Toronto, many set their sights on homes outside the city in favour of the surrounding GTA. However, high demand and higher prices have swung the pendulum toward an even stronger seller’s market in virtually every municipality across Southern Ontario.

During the month of July, the GTA saw almost 9,400 unit sales. While this is down 14.9 per cent compared to June 2020, it is far above the average for the month of July. Toronto Regional Real Estate President Kevin Crigger notes that housing demand in the GTA has been strong and has led to a very active market. “Demand for ownership housing has remained strong despite a pandemic-related lull in population growth. Of specific note is the condominium apartment market, which has seen a marked turn-around in 2021 with sales up compared to last year. First-time buyers, many of whom were slower to benefit from the initial recovery phase, remain very active in the marketplace.”

High demand in the GTA has led to double-digit percentage gains in price year-over-year for the area. The MLS® Home Price Index Composite Benchmark was up by 18.1 per cent compared to July 2020. The average price for all home types combined was $1,062,256; up more than 12.6 per cent over July 2020.

High GTA Real Estate Prices Mean Homeowners Get Creative

With prices in the GTA continuing to rise, homeowners are increasingly looking to less conventional methods to break into home ownership. While the trend is more pronounced in higher-priced urban centres, it’s gaining in popularity from coast to coast. The latest RE/MAX 2021 Housing Affordability Report states that one in three Canadians are exploring alternatives that can increase their chance of buying a home and building their equity.

Twenty-one per cent have considered renting out a space in their primary residence; 13 per cent have considered pooling finances with friends or family to afford a mortgage; and seven per cent have considered living in a co-op or shared living arrangement.

This reality is starkly different from home ownership 30 years ago, particularly for first-time buyers. Approximately 71 per cent of Canadians aged 18 to 34 surveyed indicated concern when it came to the ability to afford a home in the next two years.

Future Affordability of GTA Real Estate

As Canadian borders open and immigration levels begin to climb, it is expected that demand for GTA housing will only intensify. John DiMichele, TTREB CEO, echoes this sentiment. “There is a huge backlog of people seeking citizenship or permanent resident status in Canada. A large share of these newcomers will ultimately choose to call the GTA home. This means ownership and rental market conditions will remain tight with upward pressure on prices for the foreseeable future. Policy makers at all levels must pursue a coordinated effort to bring on a greater diversity of supply in major metropolitan areas.”

This means that if you are looking to purchase a home in the GTA in the near future, a cooling of prices won’t surface in 2021, nor in the first few months of 2022. If you are attempting to navigate this tight, competitive market – whether now or next year – ensure you have an experienced REALTOR® by your side to help you find that golden opportunity that meets your needs and budget!

Sources:

• Daily Hive
• InSauga
• Toronto Regional Real Estate Board