For the past few years, you could hear the crickets chirp in the housing market in York Region, north of Toronto. Prices had come down after the province introduced a foreign buyers’ tax, and this time last year, the area was a “buyer’s market,” with relatively few sales.
Today, amid a pandemic and a major economic slowdown, home sales there are almost back to pre-pandemic levels. And with fewer homes listed, the market has bounced back to “balanced” territory, real estate portal Zoocasa declared this week.
“There seems to be a resurgence in demand for York Region detached properties due to the pandemic,” said Claudio Castro, a Zoocasa agent who works in the area. “As more people recognize that they may not need to be in the office five days a week for the foreseeable future, many are revisiting detached properties in the region so they can have more space.”
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In Durham Region, east of Toronto, sales were actually up 8 per cent compared to a year ago, while in Halton Region, west of the city, sales were up 22 per cent at the end of June, according to a Zoocasa analysis of data from the local real estate board.
Both Durham and Halton were “seller’s markets” in recent weeks, Zoocasa said, with sales rising faster than new listings. Meanwhile, in the City of Toronto sales were down 13 per cent in the same period, and Zoocasa called it a balanced market.
“It may be too early to say with certainty, but based on what our agents are experiencing and what the market data shows us thus far, the uptick in interest in outlying regions like York, for example ... could be attributed at least in part to the pandemic,” a Zoocasa spokesperson told HuffPost Canada.
“That being said, the pandemic and the economic and health-care conditions that it has created are unprecedented, so it remains to be seen what kind of broader, long term impact it will have on housing demand across the GTA.”
One thing is certain: Toronto is not alone. A similar trend is playing out in major cities around the world, where certain people ― particularly high income earners and youth ― have headed out of the city and into the suburbs or further afield as the pandemic spread through major metro areas.
House prices in metropolitan New York are down 1 per cent in the past year, while in nearby New Jersey, they are up 2 per cent, according to data from Zillow, which rates New Jersey’s market as “very hot” and New York’s as “cool.”
For New York, this isn’t actually new. In fact, data shows that the U.S.’s three largest metro areas have all been losing population in recent years, in the case of New York and L.A. due to high living costs, and in Chicago’s case due to a weak economy.
Population boom turns to bust
But for Toronto, the shift could be more disruptive. Last year the area became the fastest-growing metro in North America, beating out previous champion Dallas, according to recent data from Ryerson University’s Centre for Urban Research.
But right now, population growth has likely ground to a halt with borders shut to most immigrants and international students.
“Without immigration, the Greater Toronto Area’s population would be declining,” CUR researchers Diana Petramala and Hannah Chan Smyth wrote in a recent report. In an earlier report, issued in March, Petramala showed that Toronto is the largest net loser of people to out-migration, with the regions around Toronto ― including Simcoe, Halton and Durham ― among the largest beneficiaries.
The lack of new residents means that condos in the City of Toronto will be the property type that will suffer most in this year’s slowdown, the researchers predicted. Though they expect home prices to remain stable in Greater Toronto over the next year, the City of Toronto will likely under-perform the rest of the area, they predicted.
And because low-income Canadians were much more likely to lose their jobs in this crisis, condos will under-perform detached homes, Petramala and Chan Smyth wrote.
The questions on observers’ minds include: Is this a temporary or a permanent shift? Will city dwellers return to town once the pandemic is behind us?
Richard Florida of the University of Toronto’s Rotman School of Management believes the answer is yes. In an analysis for Bloomberg CityLab, Florida argued the trend is less pronounced than real estate agents and media reports make it out to be.
He cited data showing only 1.6 per cent of New Yorkers had their mail forwarded outside of the city during the height of the pandemic, and concluded that “most who are likely to stay away from the city are families with children who would have left the city anyway in the coming year or two.”
Florida expects the pandemic to do little to change major cities’ cultural and economic dominance in our world.
“New York and London will still be its leading financial centers; the San Francisco Bay Area its hub of high technology; and Los Angeles its center for entertainment and film. Shanghai, Tokyo, Hong Kong, Singapore, Paris, Toronto, and Sydney will all continue to be great global cities,” he argued.