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Oshawa housing to move into buyers’ market thanks to GM closure

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Oshawa housing to move into buyers’ market thanks to GM closure

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In one fell swoop, General Motors Canada’s announcement on Nov. 25 that it plans to close all assembly operations in Oshawa, Ont. effectively has pushed housing there into a buyers’ market.

“The announced General Motors plant closure will certainly impact Oshawa, and the trickle-down effect will be felt across the province,” Christopher Alexander, executive vice-president and regional director, ReMax Integra of Ontario-Atlantic Region, told Homes Publishing.

“However, it’s important to remember that GM isn’t the economic driver that it used to be in Durham Region. The area boasts a growing education sector and a new casino is slated to open in 2019, which will boost new condo development and housing demand. With the rise of remote work and no relief expected for Toronto house prices in 2019, Oshawa will continue to be a popular choice with first-time and move-up buyers who have been priced out of the 416.”

There you have it, prospective home buyers.

Opportunity knocks

While such a major employment hit is hardly an occasion to celebrate, these developments could mean opportunity for those looking to buy a home.

“The fact is that more than 2,500 GM workers will be left in the lurch come 2020, and the looming loss of income will likely prompt a softening of the market at a local level, as existing residents and prospective homebuyers digest the news and what it might mean for them,” says Alexander. “This coming closure, coupled with further interest rate increases in 2019, is likely to trigger a market shift from the current balanced territory, as homebuyers delay purchases, scale down lower-priced properties or move away in search of employment.”

Also read: What the GM plant closure means for Oshawa economy and housing

Also read: Focus on Whitby and Oshawa

Also read: 5 affordable neighbourhoods for detached homes in 416 and 905

Another real estate expert, Don R. Campbell, says the impact of the closure could take 18 to 24 months to play out fully in the region.

Diversified economy

Thankfully, there is more going for Oshawa and the Durham Region than just General Motors. Though it was once described as the “Automotive Capital of Canada,” in recent years the economy has diversified into education and health sciences. The University of Ontario Institute of Technology, Durham College and Trent University Durham and all have campuses in the city, among other economy-boosting facilities.

Indeed, in its latest Metropolitan Outlook, the Conference Board of Canada pegged Oshawa to be one of the strongest economies in the province for 2018. The Board forecast real GDP growth of 2.6 per cent this year, following 3.2 per cent in the last two years, citing strength in the non-residential construction, education, health care, finance and insurance sectors.

In addition, Statistics Canada figures show that Oshawa was one of the fastest growing cities in Ontario from 2011 to 2016, with 6.6 per cent population growth, second only to Guelph at 7.7 per cent. This, after growing 7.7 per cent from 2006 to 2011.

Importantly, for prospective home buyers, transportation improvements such as expanded GO Transit and the Hwy. 407 extension make it easier for people to live in Oshawa – at cheaper home prices – and commute to work in other areas such as Toronto. Another extension of the 407 eastward to neighbouring Clarington is due for 2020, further easing transportation options.

New home opportunities

Tomorrow, we’ll explore some of the opportunities to buy new homes in the Durham Region.

 

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GTA condo sales and prices hit record levels

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GTA condo sales and prices hit record levels

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With home prices seemingly forever on the rise, there is only one way for many GTA homebuyers to go – up, as in into highrise condos and other multi-family housing options.

Fueled largely by affordability – and the lack thereof in lowrise homes – resale condominium apartments and townhomes in the GTA now represents almost 37 per cent of total residential sales by the Toronto Real Estate Board (TREB), up from 30 per cent in 2013, according to a new report by ReMax of Ontario-Atlantic Canada Region.

ReMax report

Momentum has also been reflected in resale condominium values, which is the only property segment that held up against the 2017 market correction, ReMax says.

The average price of a condominium unit increased almost eight per cent to $551,761 between January and October 2018, up from $512,552 during the same period in 2017.

Townhomes were slightly ahead of last year’s pace, with values hovering at $571,058, compared to $568,165 in 2017. Prices of freehold properties, including single-detached, semi-detached, attached/row/townhouse and linked townhomes are all down year-over-year.

AFFORDABILITY KEY ATTRACTION

“The condominium lifestyle continues to resonate with buyers in the Greater Toronto Area for a number of reasons,” says Christopher Alexander, executive vice-president and regional director, ReMax of Ontario-Atlantic Canada Region. “While the affordability aspect is first and foremost, we’ve also a seen strong investor presence in recent years.”

Alexander cites a recent report by Urbanation and CIBC, which found that investors who bought condominiums for the purpose of renting accounted for 48 per cent of all newly completed units in the GTA in 2017. “The income potential, given today’s tight rental market, in addition to the overall return on investment, has been a serious draw for real estate investors.”

Immigration, population growth and lifestyle choices have also contributed to the uptick in demand for condo apartments and townhomes. Aging infrastructure, combined with a lack of transportation alternatives, longer commute times and the environmental component – with efforts to reduce carbon footprint – have all played a role in buyers choosing condominiums in Toronto proper that are close to both work and play, Alexander says.

DOWNTOWN THE CHOICE LOCATION

The most popular area for condominium sales remains the downtown core, with one in every five condominiums (21.9 per cent) sold in the area bordered by Bloor Street to the north, the lakeshore to the south, the Don Valley Parkway to the east and just past Dovercourt Road in the west.

“In spite of a proliferation of condominium developments over the past decade, supply and demand issues continue to persist in the core,” says Alexander. “Limited inventory continues to place substantial upward pressure on prices, with fewer affordable housing options available– and that includes condominium rentals.”

Average resale prices hover at $700,000 for condo units, with new construction closing in on $1,000 per sq. ft.

PROXIMITY TO TRANSIT

“Higher prices in the core are prompting buyers to consider condominium communities farther afield,” says Alexander. “New construction along subway lines to the north, east and west are exceptionally popular, especially with first-time buyers. Yonge Street north of Hwy. 401 comes to mind, as well as the Sheppard line between Bayview Avenue and Leslie Street. Combined, these two areas represent approximately 10 per cent of total resale condominium sales to date and continue to experience growth.”

Mississauga is the GTA’s second most popular destination for condominium living, accounting for 14 per cent of condominium sales so far this year.

Almost 51 per cent of condominium sales in the GTA occur under the $500,000 price point, but affordability is being threatened as builders and developers face skyrocketing construction costs and a land crunch within the GTA, and struggle to maintain the status quo, ReMax says.

“The necessity to ‘build up’ has never been more prevalent in a city that has seen its population climb from one census to the next,” says Alexander. “To prevent the run-up we’ve seen in housing values in the past, all levels of government must work together with developers to streamline the building process. We need to create more affordable GTA housing options that can accommodate buyers and renters at every price point.”

THE TOWNHOME OPTION

These trends generally align with the findings of another report, from Altus Group. Lack of affordability and availability of single-family new homes has buyers increasingly looking to townhomes as a lowrise home option. But supply issues in this category have seen new townhouse sales plummet in the past two years, in both absolute terms and as a percentage of total new home sales – just seven per cent of the total in the first half of 2018.

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Vast majority of GTA Millennials fear buying a home is out of reach, poll says

7 factors that will affect GTA housing in 2019 – and 5 reasons to consider buying NOW

5 steps to solving the housing affordability issue in Ontario

 

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GTA housing market correction coming to an end, ReMax says

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GTA housing market correction coming to an end, ReMax says

Toronto fall cityscape Web

by Wayne Karl

Get ready for a busy GTA housing market this fall and into 2019, as the recent correction is coming to an end – especially for single-detached homes – according to a new report from ReMax Integra, Ontario-Atlantic Canada Region.

Following a strong summer market, demand for detached homes is on the upswing, as active listings fall and average prices begin to rebound, the realty firm says.

The supply of detached homes listed for sale has gradually declined, after peaking in May, according to the Toronto Real Estate Board. Average price in the nine TREB markets has been battling back from trough levels that were reached as early as July of 2017 in Durham Region to as recently as February of 2018 in the Central Core.

GAINING MOMENTUM

“We expect momentum to build moving into the traditional fall market, and the trend to continue throughout the remainder of the year,” says Christopher Alexander, executive vice-president and regional director, ReMax Integra, Ontario-Atlantic Canada Region. “The worst is now behind us. Pent-up demand will be a factor in the coming months, as homebuyers – many of whom delayed their purchasing plans – are entering the market.”

Despite some softening in sales activity, condo prices have continued to climb throughout 2018, with the year-to-date average price (January to August) now $548,103, seven per cent ahead of 2017 levels. During the same period, average price for a detached home in the GTA has come down 11 per cent to $1.01 million. The differential – $623,288 versus $464,729 – has many buyers thinking that if they stretch their budget, they can buy a detached home, Alexander says. Condo townhouse values were on par with year ago levels ($569,103 versus $571,463), while semi-detached homes were down just three per cent year-over-year.

First-time buyers of single-detached homes in the $600,000 to $900,000 range are leading the charge, ReMax says. Since June, this segment has reported a 22-per-cent increase in year-over-year sales. Inventory at this price point in the 416 area is low, potentially prompting buyers to expand their search into the 905, where supply and price options are more plentiful.

The luxury market is also beginning to firm up, with a 16-per-cent increase in sales of single-detached homes priced at more than $2 million in July and August, compared to the same period in 2017.

416_monthly_avg_price

“It’s been a real roller coaster for single-detached properties in the GTA over the past 32-month period,” says Alexander. After reaching peak levels in early 2017, market-cooling tactics such as Ontario’s Fair Housing Plan in April, the federal government’s mortgage stress test expansion in October of 2017, and the Bank of Canada’s interest rate hike in January of 2018 created a great deal of uncertainty in the market.

Many financial experts, however, expect another interest rate hike, possibly as early as the next Bank of Canada announcement on Oct. 24, or the following one on Dec. 5.

“There’s no question that the threat of higher interest rates has propelled more buyers into the GTA housing market in recent months,” Alexander told Homes Magazine. “We suspect that small, incremental hikes will be absorbed, especially in the short-term, as buyers take advantage of detached housing values that are off peak levels.

“While the October 2016 stress test for high-ratio mortgages had little impact on the market, the same can’t be said for subsequent interventions,” says Alexander. “Conditions had changed. Inventory levels reached their lowest point in October 2016, which contributed to a notable uptick in sales and pricing between October and May 2017. The introduction of the Fair Housing Plan set the wheels of correction in motion.”

The run-up in detached housing values between January 2016 and peak levels in early 2017 was unprecedented. The highest appreciation was noted in the city’s west end, where the average price had climbed 60 per cent in the 14-month period, rising from $763,327 at the start of 2016 to $1.22 million in March of 2017.

DURHAM, SIMCOE & DUFFERIN COUNTIES

Durham Region, Simcoe County and Dufferin County also experienced serious gains in just over a year, with prices climbing 55 per cent, 52 per cent and 59 per cent, respectively. The average price of a detached home in the central core, home to the most expensive properties in the GTA, rose 48 per cent, jumping from $1.68 million in January 2016 to $2.5 million in February 2017. Peel Region, the city’s east end, York and Halton Regions all reported increases ranging from 38 to 47 per cent over the one-year period.

“The pace was simply unsustainable,” says Alexander. “While government intervention appeared heavy-handed at the time, in retrospect, the measures put in place served to cool down a wildly overheated market.”

Since then, buyers have cautiously re-entered the market, with many taking advantage of lower, post-correction detached property values. By the end of August 2018, homes in the more-affordable West and East Districts were back on the rise and within striking range of those average prices reported during the same period in 2017. Detached housing values in the city centre – the target of investors throughout 2016 and early 2017 – have been climbing, albeit at a more moderate pace, particularly north of Hwy. 401.

905_month_ave_price

In the 905 areas, recovery is moving at a slower pace, but as inventory levels decline, detached housing values are expected to appreciate. In particular, Brock (Durham Region) and Essa (Simcoe County). Burlington, Halton Hills, Brampton, Orangeville and Scugog are all showing promise in detached home price growth.

“After an extended period of housing market inertia, the floodgates are breaking open,” says Alexander. “Upward movement in detached housing values and the threat of additional interest rate hikes in the future are prompting homebuyers to get off the fence and into the market. Rising consumer confidence, job security and an economy firing on all cylinders should continue to support healthy home-buying activity in the GTA for the remainder of the year and into 2019.”

Wayne Karl is Senior Digital Editor at Homes Publishing Group. wayne.karl@homesmag.com

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