Toronto versus the Suburbs

When housing prices started to fall from the 2017 peak, analysis started to turn to which GTA communities had been hit the hardest.  As the price drops were not distributed evenly across all municipalities, the conversation shifted to people trying to understand which cities are the safe real estate bets.  As a rule of thumb, many seem to be confident that Toronto will be safe, while the suburbs are where price corrections could take place.  As is the purpose of this blog, let’s analyze this belief that Toronto household prices are protected from suburban price swings.

Monthly average home prices in the City of Toronto versus its suburbs only matter so much because of the variance of the types of homes for sale.  The suburbs have a far higher percentage of detached dwellings than Toronto and Toronto has far more condos than the suburbs.  To provide a more meaningful review, we will instead examine the four housing types tracked by TREB: detached, semis, townhouses and condos.  Prices between Toronto and its suburbs are compared using the month of April each year going back to 2010.

Detached Houses

Detached Houses
Year Rest of the GTA Toronto % Suburbs/City
2010 $485,301 $684,928 70.9%
2011 $528,970 $759,875 69.6%
2012 $579,278 $831,214 69.7%
2013 $588,784 $852,090 69.1%
2014 $645,179 $965,670 66.8%
2015 $729,961 $1,056,114 69.1%
2016 $881,413 $1,257,958 70.1%
2017 $1,098,827 $1,578,542 69.6%
2018 $929,092 $1,354,719 68.6%

Over the last nine years, the average price of a detached home throughout the GTA has essentially doubled, with prices peaking in April of 2017 for both the city and the suburbs.  Additionally, prices have moved in almost perfect harmony the whole time.  Detached homes in the suburbs have been roughly 30% less expensive than Toronto during the entire price run.  The greatest difference in the last nine years came in 2014 with suburban detached homes falling to 66.8% of the average cost of Toronto.  The remaining eight years show great consistency with the ratio only ranging 2.3% between 68.6-70.9%.

Semi-detached Houses

Semi-detached Houses
Year Rest of the GTA Toronto % Suburbs/City
2010 $346,460 $504,109 68.7%
2011 $368,843 $558,903 66.0%
2012 $393,889 $581,304 67.8%
2013 $410,739 $595,398 69.0%
2014 $443,318 $702,332 63.1%
2015 $489,796 $727,875 67.3%
2016 $572,318 $901,159 63.5%
2017 $727,218 $1,104,047 65.9%
2018 $656,874 $1,021,986 64.3%

Over the same period, semi-detached homes offer slightly greater movement between the yearly comparisons; however, as a trend the prices still move in strong correlation.  Suburban prices fall to a low in 2014 of 63.1% the average price of Toronto, though the year before the suburbs were at their comparably most expensive at 69%.  Generally, the price ratios hold that the city and its suburbs move together.

Townhouses

Townhouses
Year Rest of the GTA Toronto % Suburbs/City
2010 $311,187 $389,522 79.9%
2011 $337,633 $421,384 80.1%
2012 $364,099 $423,062 86.1%
2013 $375,269 $433,710 86.5%
2014 $410,270 $498,083 82.4%
2015 $448,236 $551,231 81.3%
2016 $514,774 $611,899 84.1%
2017 $673,942 $793,129 85.0%
2018 $604,853 $792,180 76.4%

For townhouses the 2018 numbers offer the greatest support for the belief that Toronto home prices will be protected above its suburbs, as the ratio falls to the lowest level over the past nine years.  That said, from 2010-2017 we see strong price consistency and an overall trend to suggest no real urban/suburban divide.

Condos

Condos
Year Rest of the GTA Toronto % Suburbs/City
2010 $248,117 325,238 76.3%
2011 $270,896 351,763 77.0%
2012 $289,819 360,807 80.3%
2013 $273,832 379,266 72.2%
2014 $296,078 384,758 77.0%
2015 $318,471 407,612 78.1%
2016 $343,439 436,545 78.7%
2017 $449,792 578,280 77.8%
2018 $457,014 601,211 76.0%

Even condo prices have held with regularity between Toronto and the GTA.  Other than a suburban average price drop in April of 2013, the ratio between suburban/urban prices has only varied 4.3% between 2010 and 2018.

One thing that was consistent across all four housing types was that April 2018 offered the lowest or second lowest price ratios over the past nine years.  This means either those that believe the city will be protected while the suburbs experience price drops will be proven correct, or the ratios will be restored. Looking at recent history, the evidence demonstrates that the home prices in Toronto and its suburbs move in partnership, meaning traditionally if one moves the other has too.

Note: For greater confidence in the numbers reviewed an analysis of Octobers from 2010 to 2017 was also performed.  The October price ratios were actually more consistent than the April figures shown in this post.

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