Toronto area home prices up 453% since 1996, report finds -- with strong growth predicted to continue

Skyrocketing prices over the last 25 years were fuelled by strong demand and limited supply, a new report by Re/Max Canada found.

thestar.com
Clarrie Feinstein
Feb. 23, 2022

In 1996, the average price for a home in the GTA was $198,150. Today, it’s $1,095,475.

Skyrocketing prices over the last 25 years were fuelled by strong demand and limited supply, a new report by Re/Max Canada found. Since 1996, residential unit sales have doubled and the average price has increased by 453 per cent.

Between 1996 and 2021, more than two million homes were sold in the GTA, representing a $1.1 trillion boom for the real estate market.

“Performance of the GTA housing market over the 25-year period has been nothing short of remarkable,” said Christopher Alexander, president of Re/Max Canada, in a press release. This is especially so when considering this time period was characterized by the tech meltdown of 2000, 9/11, SARS, the Great Recession of 2008, Ontario’s Fair Housing Plan and the ongoing pandemic, he added.

While costs are shooting up, Alexander said the average annual growth rate is 7.08 per cent, which is the “best pocket” to be in as it’s not too strong and is still positive -- meaning homeowners make “a bit of equity every year.”

“Anything over eight or nine per cent you’d have concerns over how long it will last,” Alexander said. “There have been so many stories on a real estate bubble but seven per cent is perfect. If you could hope for an appreciation number year-over-year that would be it.”

The report analyzed home buying activity in nine GTA regions -- Toronto East, Toronto West, Toronto Central, Durham, Halton, Peel Region, York Region, and Simcoe and Dufferin counties.

It found land availability, especially in the city’s core and surrounding communities, waned. Low supply combined with migration, low interest rates, and affordability continue to impact the market in the GTA, the report said.

While a handful of regions experienced triple-digit increases in sales, including Toronto Central, Halton Region, York Region, Simcoe County and Dufferin County, the entire GTA “reached new heights” for average sale prices.

A reason for increased sales in Halton, Durham, Peel and York regions is new construction -- East Gwillimbury is the fastest growing municipality in Canada.

For the last 25 years, these regions offered more affordable options for those looking to purchase, the report says. First-time home buyers moved in and transportation infrastructure with the GO train and another 400-series highway developed.

But with less land to build on, high density housing has become a priority with more condominiums being built -- condos in Mississauga represent one in every two sales, the report said.

Condo apartments and townhomes account for 76 per cent of sales in Central Toronto, according to data from the Toronto Regional Real Estate Board (TRREB).

In Toronto there isn’t much land available to buildup supply, said Cameron Forbes, a broker with Re/Max real estate.

To increase supply, the GTA needs to be creative and get “more flexible with municipal bylaws,” he said.

Ways to do this include, turning existing lots into two units, converting single family homes to multi-family dwellings, and demolish existing stock to increase density -- the Imperial Oil building on St. Clair Avenue West -- now the Imperial Plaza Condominiums -- is a prime example, said Forbes.

With population growth in the GTA expected to explode, high demand will continue, Forbes said.

During the start of the pandemic immigration numbers fell with border closures. But the federal government is making up for the shortfall allowing more than 400,000 new permanent residents in 2021 -- the most newcomers in a year in Canadian history. In 2022, the country is expecting 420,000 newcomers, and 430,000 in 2023.

Around 40 per cent will settle in the GTA, said Forbes, resulting in roughly 160,000 to 170,000 newcomers. That means 50,000 to 60,000 new homes will need to be constructed annually to accommodate them. For the last decade, 40,000 new homes have been built annually, he said.

“That’s a big reason for the driving cost,” Forbes added.

But there are still pockets of affordability, he said. Those wishing to enter the market can buy smaller apartments in the city or move further out in the GTA, or just outside of it, if looking for a family home. Because of the pandemic, more people have moved further out of the city centre, made possible by remote work, Forbes said.

Over the next 25 years housing prices are expected to rise at a greater rate than inflation due to population growth and the job market, with many flocking to the GTA for career prospects.

“The economy is strong in the GTA,” Forbes said.