Cynically, you’re probably saying, “those who can’t afford it,” and “because they can’t afford it.”
You’re not wrong, but that’s the simple answer.
Let’s look at prices in Toronto, and prices outside it – areas like Mississauga, Oakville, and Hamilton, and today I’ll tell the tale of a few of my clients who have made this decision, and this major move, thus far in 2016…
In the summer of 2014, I sold a 1-bed, 1-bath condo for a couple at Bloor & Sherbourne for $368,888.
They were in their late 20’s if I had to guess, both working professionals, neither originally from Toronto.
When most of my sellers sell, it’s because they’ve either bought, or they’re going to buy. I’ve only ever had one client sell before buying in the last 5-6 years.
And these guys were no different; when we first met, they told me that they had already bought a large home in Oshawa.
They had spent two months looking at properties out in Oshawa, and they found one, and were now ready to sell their Toronto condo.
They told me about the home they had purchased: a newer build, 4-bed, 4-bath, on a large lot. “Large” in Toronto means 35-feet-plus, so I can’t imagine what “large” means in Oshawa. We could be talking acreage for all I know.
I never really thought to ask what they paid for the house, partly because it wasn’t my business, but also because I wasn’t all that curious about Oshawa real estate.
It wasn’t until I told them their condo was worth around $360,000 that I found out what they had spent. Because in response, one of them said, “Three-hundred-sixty thousand eh? Wow, that’s more than we paid for our house!”
More than they paid for their house?
Were we talking about the same house?
A 4-bed, 4-bath?
Now, I believe the house was just outside prime Oshawa, and I was about to put prime in quotation marks, but that’s overly-cynical. I don’t know the area all that well, and while I’m sure there are better, worse, cheaper, and more expensive pockets, I know that my clients found a large, new house in a sought after area, and they paid less than $360,000 for it.
One of them was originally from Oshawa, and I can’t recall where the other was from.
But both would be working in Oshawa, so it was “buh-bye” Toronto, and I’m sure they’re still laughing to this very day, from their main floor family room with fireplace and skylight…
That was one of the first experiences I had with clients selling in Toronto to move elsewhere in the GTA, but since then I’ve had more than a dozen.
And this year alone I’ve worked with several clients in Oakville, Mississauga, Woodbridge, and Ajax, all of whom condos in Toronto, and sold their condos to move to a house outside the core.
I’ve seen this trend pick up steam with each passing season, and as a result, we’re seeing stories like this one from two weeks ago:
The CMHC is just full of great news, aren’t they?
Have a look at the article if you get a chance, although there are two excerpts I want to draw attention to.
As housing prices go up and full-time jobs go down, Hamiltonians are moving to outlying areas like Brantford, St. Catharines and Caledonia just to be able to afford a house. And a senior market analyst with the Canada Mortgage and Housing Corporation (CMHC) says that migration trend is only going to continue.
And then this:
Hamilton has had a hot housing market in recent years. In the last year alone, the price of an existing home in Hamilton has increased by about 14 per cent. Last year, the average price of an existing home was $447,000. As of September this year, that price is about $511,000.
In contrast, the average price of a home sold in Brantford last month was $366,310, according to the Brantford Regional Real Estate Association.
The first section is something I find ironic, and almost a bit funny.
The CMHC is saying that Hamiltonians can’t afford housing prices in Hamilton, and they’re moving outside the city.
Ironic? Yes. Because Torontonians can’t afford housing prices in Toronto, and are moving outside the city……..to places like Hamilton.
So it might follow that in coming years, we’ll see articles about Brantford, St. Catharines, and Caledonia, with the caption “Brantfordians can no longer afford housing prices and are moving to Saskatchewan.”
The “problem” in Hamilton is no different than the problem in Toronto, or any other metropolitan area in the Golden Horseshoe, which is simply that there is more demand than supply.
In the second quarter of 2016, net migration in Ontario was 33,052.
This represented a whopping 38% increase over the second quarter of 2015.
So we’re looking at a need to house 130,000 more people in Ontario every year, and I don’t need numbers to tell me that we aren’t building 130,000 new houses, condos, or apartments.
So whether you’re a Torontionian buying in Hamilton because you can’t afford to buy in Toronto, or a Hamiltonian buying in Brantford because you can’t afford to buy in Hamilton – you’re not alone.
And this domino effect will continue until folks are pitching tents in Algonquin Park.
Now the second excerpt from the article shows that Hamilton prices are up 14% per year, which is perhaps a pittance compared to the 22% increase in the average Toronto home price, but relative to other markets, and just the idea of “the steel city” in general increasing double-digits, is impressive, if not unexpected.
So I think it’s safe to say that wherever you’re looking in the Golden Horseshoe, prices are up year-over-year, and significantly.
If you’re moving out of Toronto to avoid the 22% increase in housing prices, and looking to move into a city or town with an 8% increase in average home price, then I suppose you’re cashing out. But price appreciation aside, also consider what you can actually buy in other areas, compared to what you can get in Toronto, and I think that’s what’s driving the decision.
This past spring, I helped two clients – Donald and Kara, with their housing search in Mississauga.
Donald and Kara lived in a 2-bed, 2-bath condo by the waterfront with a sprawling 600 square foot terrace, and it met all their needs for 4-5 years as they passed through their late-20’s, and into their early 30’s.
The second bedroom was opened up to create an incredibly unique, over-sized 1-bed unit with tons of entertaining space, and the outdoor space was rare, spectacular, and incredibly functional for 3-4 months per year.
But as time moved on, so too did their needs, and once you start to think about having a family and getting into something with a backyard, on a tree-lined street, and with a helluvua-lot more square footage, then you start too consider whether buying in Toronto is even an option.
In their case, it was not.
They wanted to spend $800,000, but what they wanted, as is often the case with Toronto buyers, might have cost them double.
Donald worked in the financial district, and Kara more toward the west end, but both were used to commutes that consisted of walking, taking TTC, or a combination of both. Overall, it was the time of the commute, and not the type, that mattered, and as we began to look at houses in Mississauga that were right on the GO Train line, we realized that it might actually take less time door-to-door.
We looked at houses, south of Queensway, all the way from Winston Churchill to Dixie.
Lakeview, Mineola, Port Credit, Lorne Park, Birchwood, Clarkson, Clearview, and we’d have gone as far as Oakville, if it weren’t so expensive.
Like Toronto, there were a lot of homes listed with “offer dates,” and we ended up losing in competition once (or twice?) before we eventually bought a place.
But in the end, $875,000 got us a massive 50-foot lot, 120 feet deep with a backyard the size of a park; 4-beds, 3-baths, and with the sidesplit style, it offered essentially two different “family rooms” that were 400-500 square feet. The house was basically gutted, and everything in there was new.
3,300 square feet of total living space.
And did I mention the 50-foot frontage?
How do you beat that for $875,000?
And the train from Clarkson to Union is 25-minutes in the morning.
No, that’s not a ballpark, and I’m not rounding. Look:
Donald told me from the start, “I’m not comfortable with a $500,000 loan hanging over my head.”
I told him that I have clients with twice, or three times that, and that his down payment was 2-3 times that of my average client.
But to each, their own.
Some people want to buy for $2,000,000 with $500,000 down. But many don’t.
I had another set of buyers end up in Mississauga not too long ago, although these guys were looking in Woodbridge first.
Andrew & Stacey lived in an 800 square foot, 1-bed, 1-bath in King West, and also wanted to get out of the condo, into a freehold, and start thinking about the future – and maybe a family!
Andrew worked from home, but Stacey worked at Dundas & 427 and drove to and from work every morning and evening.
Our initial search took us to Woodbridge because of the prices, and because they were looking for something detached, which I told them was still going to be tough to find under $800,000.
Woodbridge is a tricky spot, since there are pockets of 30-40 year old houses, some of them in complete disrepair, south of “prime” Woodbridge, which has multi-million dollar houses on massive lots, with newer, 10-year old pockets of homes to the north.
Vellore Village and Sonoma Heights were our stomping ground every weekend for a month, but the houses felt a little snug for Andrew & Stacey’s liking.
These houses too, as you might expect, often sold in 6-8 offer frays.
We lost a couple of bids, and then eventually one of us (whoever is smartest – probably Stacey), suggested we switch gears and consider the newer pockets of Mississauga, north of the 403, like Erin Mills & Streetsville.
South of the 403, and north of the water, is home to an older stock of homes, many of which have been really nicely upgraded (like the one my clients Donald & Kara purchased), but the “infill development” from 10-15 years ago is going to be found further north.
We ended up with a 2-storey, 3-bed, 3-bath home on a 45-foot lot, nicely upgraded, built in 2002, and on a tree-lined street in a family-oriented area. For $850,000.
And then they sold their 1-bed, 1-bath condo for $625,000.
How is that for a trade-off?
$625,000 for a 1-bed condo.
$850,000 for a 3-bed, 3-bath home on a 45-foot lot.
It sounds crazy, but it’s not; it’s just the Toronto market.
I will undoubtedly have more clients looking to sell their Toronto condos and move out of the city in 2017, but I think each client who makes the move will feel less and less of a sense of surprise among friends, family, and colleagues. It’s simply becoming more…….expected.
Don’t get me wrong – this represents a fraction of my buyer/seller clients, but the number has increased massively over the past few years, specifically the last two.
So there are two stories; three if you count the one in the intro.
I’d love to hear from anybody else who has made the move – when, what, and why.