I don’t know what got into me today, but apprently I felt like doing two hours of data entry!

That, and I really wanted to know the answer to a question that I had proposed…….to myself.

Does price relief exist outside the 416?

I mean, does it really exist outside the 416?

We all think it does, and hope it does.  I’m selling more and more houses outside the core to buyers who can’t afford to live in it, at least, in a house that they want.  And overall prices are lower.

But are they lower on a relative basis?  That is to say, have prices outside the core been slower to appreciate than prices in the “red-hot” Toronto market?

That’s what I wanted to find out today.

So I decided to look at a thirteen areas (the unlucky number is a coincidence) where a lot of buyers are moving in lieu of buying homes in Toronto:

Burlington
Halton Hills
Milton
Brampton
Caledon
Mississauga
Aurora
Newmarket
Whitchurch-Stouffville
Ajax
Oshawa
Pickering
Whitby

Apologies if I didn’t include your area, but while I didn’t feel like anything in Simcoe County was relevant (Scugogites, don’t hate me…), and I also didn’t include areas like Markham because prices are already so damn high, and my clients aren’t really looking for “relief” there.

So before we being, just as a refresher:

“Toronto” for our intents and purposes is not the GTA, but rather the area noted above which is the waterfront, to 427/Humber River, to Steeles Avenue, to the Scarborough/Pickering Townline.

Keep in mind this is not the central core, but rather this area encompasses lots of “cold(er)” real estate pockets.  Rexdale, Agincourt, Malvern – these areas are all included in our “Toronto” area, so this is not an exercise in pointing out how hot the central core is, but rather trying to see how prices have fared in areas outside it.

I’ve decided to look at detached houses in this experiment, since detached houses are the “Holy Grail,” and it’s what everybody would want, in a perfect world.

I’m also going to look at not one, but three months: April, May, and June, which typically represent “peak season” in our market, but also because we want to include 2019 numbers in this experiment.

So I’ve inputted all the sales and average prices for April, May, and June, for 2015, 2016, 2017, 2018, and 2019, in all thirteen areas.

Then I’ve taken a weighted average to find an overall price, which is to say that if April saw 100 sales and an average price of $500,000, and May saw 250 sales at an average price of $520,000, then surely an averaging of the two would not paint a correct picture, since 2.5x as many houses sold at the higher price in May.  I’ve left the calculations out, and simply presented the findings by year for each area.

Starting with Burlington:

So let’s start here with the 27.1% appreciation from April/May/June of 2015 to the same period in 2019.

In four years, the average price of a detached home is up 27.1%, or roughly 6.8% per year, not compounded.

That’s a reasonable return in any market, and while Warren Buffet wouldn’t be impressed, most pension funds would be.

I’ve also included the year-over-year, figures, as I think this will shed some light on the peaks and valleys, and the volatility.

–

In neighbouring Halton Hills, we see a whopping 41.4% appreciation in four years, which is just uncanny.

The other items to note here are twofold:

1) The decline in prices from 2017 to 2018 is only 3.0%, which as you’ll see later on, is
2) Unlike Burlington, the 2019 average price did not drop.  In fact, while 13 of 13 areas saw prices drop from 2017 to 2018, only 6 of 13 areas saw a further drop in 2019.

–

Here in Milton, we see another big number – 37.9% in four years.

As we’ll note throughout, Peel and Halton have done much better than York and Durham.

–

There’s far more volume in Brampton than in any other area on our list, and that simply takes the potential for volatility out of the equation.

–

Here’s our big winner; I won’t try and save the surprise for the end.

There’s so much to note here with the Caledon numbers, I almost don’t know where to start.

First, see the 35.7% increase, year-over-year, in 2017.  That’s atop the list.

Second, see the 57.3% increase inside of two years.  That’s positively mind-blowing.

Last but not least, the 46.1% increase from 2015 to 2019 tops our list.

–

I have nothing to note here except that Mississauga’s numbers are unspectacular, on a relative basis.

–

Here’s where I notice another trend: although Halton Hills, Brampton, and Caledon hold 3 of 4 top spots for the appreciation since 2015, none of them saw back-to-back, year-over-year increases in average sale price over 20%.

Aurora saw a 26.2% increase in 2016, and that was followed by a 23.5% increase in 2017.

And yet Aurora, when all is said and done, will hold the second-from-the-bottom spot for appreciation since 2015, as well as the second-biggest decline in 2017.

–

The Newmarket numbers follow Aurora very closely, as you would expect, given their proximity.

–

Here’s an interesting coincidence, if you want to call it that: the 57.2% increase in value from 2015 to 2017 is 2nd of the thirteen areas on our list, only by 0.1% to Caledon’s 57.3%.  And yet, Whitchurch-Stoufville not only has the worst appreciation from 2015 to 2019, but also the biggest drop in 2018.

Good time to buy in Stouffville, wouldn’t you say?

–

Let’s look at these areas all together, since many of you driving along the 401 toward your cottage really don’t notice a difference between Ajax, Oshawa, Pickering, and Whitby.

But Pickering does have some pricey areas!  Detached homes peaked here at just less than $1M in 2017.

Oshawa remains the cheapest area on our list.

–

So what do we make of these numbers?

I mean, some of them are just bonkers, and we could talk for days about 2017.

But is there actual “relief” to be seen here?

I suppose it all depends on what we’re getting relief from, so why don’t I share the same numbers, run for Toronto?

Here you go:

Wow.

These numbers look pretty tame in comparison to several of the areas above!

I would note that sales are up significantly in 2019 over 2018, but that’s after a massive drop from 2016, to 2017, to 2018.

The increase in prices, surprisingly, pale in comparison to some of the other areas, and that’s whether we’re looking year-over-year, or from 2015 to 2019.

So is there any relief here?

To be honest, not really.

Look at where Toronto ranks on the list of respective increases in average detached home sale price from 2015 to 2019:

Damn, Stouffville is looking good right now!

And for the life of you, did you ever think that Milton would out-appreciate Toronto by 10% over a four-year period?

Just for “fun,” let’s look at the decline in each of the thirteen areas from 2017 to 2018, just to put that crazy year in perspective:

I still can’t get over Caledon.  The region is 4th from the bottom on this list, but still saw a 57.3% increase over four years.

–

So what do we make of all this?

Well, I suppose that every time I hear radio callers suggest that the government should “seize” all houses so that we can “start from scratch” with the housing market, and offer properties to everybody, in a “fair” system, where prices are more reasonable, I’m reminded that people have no idea what the hell is actually going on in the market.

Toronto is hot.

Ontario is hotter.

Tell me that it’s really the “Greater Toronto Area,” but do you know what’s happening in Niagara-on-the-Lake right now?  or Hamilton?  Or Port Hope?

Let’s split the difference and say that it’s the “Golden Horseshoe” that’s hot.

And since the Golden Horseshoe counts for 55% of Ontario’s population, and 21% of Canada, I think it’s reasonable to say that these prices are simply the new normal.

If you’re looking for “relief,” well, I think you’re better off with a Rolaid…