Is the 905 Detached Market Still Alive?

Published on 29th August 2019

In last week’s Insight Article, I provided a breakdown of the somewhat shocking numbers of the 416 detached market and the neighbourhoods that are surprisingly more active than expected. In case you missed it, you can check out last week’s Insight Article here:

 

READ: Detached Prices DOWN, Sales UP… WEIRD STUFF!!

In this week’s Insight, and as promised from last week, I’ll break down those exact numbers for the 905 region.

Coverage Area – In case you weren’t aware, the 905 Region is actually larger than just the York Region (Markham, Vaughan & Richmond Hill) and Peel Region (Mississauga, Brampton & Caledon). The 905 Region extends as far out west as the Halton Region (Milton, Burlington, Halton Hills & Oakville), as far east as the Durham Region (Pickering, Oshawa, Ajax and many more), and as far north as the Simcoe Region (basically everything south of Highway 90, just before Barrie and cottage country). In a nutshell, the 905 Region covers a lot more ground than what most people think.

A Picture is Worth a Thousand Words – Here are is an infographic showing you the numbers year-to-date for detached homes in the 905 area.

Again, you can that see the volume of sales activity is basically through the roof. Red means an increase of over 10% in year-over-year sales, while blue means a decrease in the volume of sales. The fact that there are absolutely no blue areas means that last year, all across the board, the amount of sales was fantastic. However, similar to the 416, this doesn’t depict the full picture of what is exactly going on.

Although the sales activity has been up for all areas of the 905, the sales prices are down in more than half of the regions!

Looking at the infographic below, you can see that there are a lot more blue areas (which indicates a decrease in year-over-year sales price).

Again, this is because the confidence of the buyers are back and we’re stabilizing, but this doesn’t mean that the prices are going up. Many of the areas where we see a drop in prices are all of the areas that were deemed to be “unaffordable”. Unlike the 416, where we had pockets of sales volume surge despite “unaffordable” prices, the 905 Region simply doesn’t have the same demand and supply dynamics.

The 416 is closer to the core and has less detached homes, meaning more demand and less supply (i.e., people want to generally live close to the city, but there isn’t enough supply). The 905, on the other hand, has larger homes, but is further away from the downtown core. Ultimately, this means more supply and less demand in the 905 Region. As you can imagine now, the 416 and 905 Regions have the opposite supply and demand dynamics.

Across the 905, the City that is the most expensive saw the lowest amount of sales volume increases. This is no coincidence. This is because detached homes in these areas are the most expensive and affordability is the name of the game now. In the York Region, this would be the City of King, with average prices of $1.5 million (down 10%). In the Halton Region, this is the City of Oakville with average prices of $1.3 million (down 0.5%), and lastly in the Durham Region, this is the City of Pickering with average prices of $840K (up 0.3%).

Overall, the detached prices in the 905 haven’t really increased, with 60% of the cities still experiencing a decrease in prices despite the sales increasing. Simply put, the prices in the 905 are still not within reach for the “average” Torontonian. Until we see more credit (removal or reduction of the stress test), I expect the detached market in the 905 to continue behaving like this for the near future.

The Wrap – If you are in a detached home and are alarmed by this insight, do not worry – it is not the end of the world. There are many strategies that you can implement to take advantage of the fact that you STILL OWN a detached home in the GTA. To learn more about these strategies, reach out to me at Zhen@PrimePropertiesTO.com or give me a quick call at 416-436-9436.

Until Next time, Happy Real Estate-ing,
Zhen

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