The City versus the Suburbs

pexels-374870.jpg

Ever since the GTA saw prices peak in April of 2017, analysts have been trying to understand which cities or communities got hit the hardest and who bounced back the fastest.  With Toronto naturally being the epicenter of the GTA, many have concluded its real estate market is the safest.  The logic being suburbs will fall before the heart of the city does.  To better understand this, we began to study the average prices found in Toronto versus its suburbs to see if traditional price ratios were breaking.

The price of the average home in Toronto versus its suburbs is an imperfect comparison, as the suburbs have a far higher number of detached homes than the city.  Likewise, Toronto has a vast condo market in relation to the suburbs.  As a result, a comparison based on housing type is the best way to see if the city is the safer financial investment than its suburbs.

The following tables show the average prices of detached, semis, townhouses and condos in Toronto and the remainder of the GTA from the October housing data.

Detached Houses

Year Rest of the GTA Toronto % Suburbs/City
2010 $ 491,466 $ 707,797 69.4%
2011 $ 534,258 $ 751,612 71.1%
2012 $ 573,598 $ 779,484 73.6%
2013 $ 607,849 $ 873,509 69.6%
2014 $ 672,929 $ 951,746 70.7%
2015 $ 734,745 $ 1,071,394 68.6%
2016 $ 948,191 $ 1,303,339 72.8%
2017 $ 910,488 $ 1,287,765 70.7%
2018 $ 914,179 $ 1,311,265 69.7%

Source: TREB, Six Housing Sense

The detached market shows relatively consistent price gains and percentages over the past decade.  Since October of 2010, the average suburban detached has cost 71% what a Toronto house costs.  This would suggest that suburban prices from October 2018 marginally underperformed against the city; however, only to the tune of 1%.

Semi-detached Houses

Year Rest of the GTA Toronto % Suburbs/City
2010 $ 336,932 $ 490,644 68.7%
2011 $ 372,022 $ 539,917 68.9%
2012 $ 390,459 $ 575,618 67.8%
2013 $ 417,124 $ 642,112 65.0%
2014 $ 450,375 $ 678,937 66.3%
2015 $ 512,234 $ 747,149 68.6%
2016  $ 607,558 $ 902,137 67.3%
2017 $ 636,829 $ 948,309 67.2%
2018 $ 659,622 $ 1,026,829 64.2%

Source: TREB, Six Housing Sense

From the semi-detached market we once again see high consistency between the two in terms of price growth and comparison percentage.  At 64.2%, the 2018 ratio is below the nine-year average of 66%, but again, holding to the longer term average would only increase suburban prices to $679,489 for the month.

Townhouses

Year Rest of the GTA Toronto % Suburbs/City
2010 $ 307,646 $ 396,013 77.7%
2011 $ 342,146 $ 440,207 77.7%
2012 $ 357,237 $ 453,477 78.8%
2013 $ 378,688 $ 473,240 80.0%
2014 $ 414,797 $ 520,705 79.7%
2015 $ 456,585 $ 579,358 78.8%
2016 $ 553,822 $ 687,809 80.5%
2017 $ 592,381 $ 742,845 79.7%
2018 $ 621,564 $ 766,718 81.1%

Source: TREB, Six Housing Sense

Townhouses are the one housing segment where suburban prices are above the nine-year average percentage.  The October average price ratio is 79%, in comparison to this year’s 81.1% mark.  In this case, suburban townhouses have actually faired better in value than their urban counterparts.

Condos

Year Rest of the GTA Toronto % Suburbs/City
2010 $ 253,927 $ 337,754 75.2%
2011 $ 276,308 $ 367,715 75.1%
2012 $ 286,138 $ 358,741 79.8%
2013 $ 295,166 $ 384,441 76.8%
2014  $ 308,919 $ 390,430 79.1%
2015 $ 318,317 $ 406,792 78.3%
2016 $ 359,451 $ 459,199 78.3%
2017 $ 435,142 $ 555,004 78.4%
2018 $ 461,013 $ 603,153 76.4%

Source: TREB, Six Housing Sense

Finishing with the condo market, we see the price ratio falling 1% under its nine-year average of 77.5%.  This would again suggest that the city is fairing slightly better than its suburban region.

Across the four sectors in general, it does appear that the city has held a minor advantage in home prices since the peak of April 2017.  That said, suburban townhouses have faired well, and the other three segments are clearly moving in close proximity whether located in the 416 or 905 (for newer numbers: 647 or 289).

Leveraging the city average or the GTA average still does not offer that community breakdown that others might point to.  Clearly some suburbs and city neighbourhoods have fared differently.  Overall though, we see a regional housing market that appears to move together through good times and bad.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s