Priced out of downtown, buyers head to Caledon, Markham, Mississauga
Sep 04, 2008 04:30 AM
Tony Wong
Business Reporter
Sales are down, price appreciation is slowing and an uncertain economy could mean further stumbling blocks ahead for the Toronto housing market.
But buying in the right neighbourhoods could mean beating the odds in a flat or declining market, a report released yesterday by ReMax Ontario Atlantic Canada says.
According to ReMax, an undervalued suburban market is outperforming a downtown core that has already seen substantial price appreciation. And suburban neighbourhoods may continue to outperform downtown areas over the short term as some buyers have been priced out of the core.
"Price-sensitive purchasers clearly broadened their search perimeters, looking to Toronto's bedroom communities for more affordable detached housing," ReMax executive vice-president Michael Polzler says.
For the first six months of 2008, the top three performing neighbourhoods for single detached homes in the GTA were all in the 905 area.
Mississauga's Lorne Park, where an average home now costs $679,914, showed the largest increase at 13.63 per cent. Caledon came in a very close second with a 13.62 per cent increase to $500,812. Markham was in third spot with a 13.5 per cent increase to $616,025.
Suburban areas also held top spots for condominium price increases.
Willowdale, Lansing gave the best return on investment this year with a 14.66 per cent rise in values to $296,854. Thornhill, where average prices increased to $290,709, was in second place with a 13.3 per cent increase. The top performers all beat the year-over-year average price increases in June – which saw a 4 per cent overall annual increase in the Toronto market for all classes of housing, including detached and condo properties. While prices are holding steady, sales are down substantially while listings are up. Unit sales of resale homes have decreased every month this year compared to year-ago figures, as buyers have many more to choose from.
But not all areas saw values increase. Former top blue-chip performers such as Forest Hill and Chaplin Estates saw prices drop by 5.42 per cent to $867,231, from $917,000 a year ago.
Condominium prices meanwhile, declined in the Dovercourt Park, Christie Pitts, Annex, Casa Loma and Yorkville neighbourhoods by 6.82 per cent to $598,085 according to ReMax.
One reason may be a new Toronto land transfer tax introduced this year that is substantially more than that paid for 905 homes, says ReMax realtor Jamie Johnston, adding, "this has certainly impacted the single detached home market."
Another way to assess return on investment is in the rental market.
Globally, Toronto's housing market while cooling, is not overvalued – at least according to a recent study of 59 cities by the Economist.
Investors looking to buy a property to rent will still do well in Toronto, where gross rental yields are about 7 per cent, one of the highest for cities in the developed world, compared to 4 per cent in London.
http://www.thestar.com/article/490233 
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