One of the ongoing narratives with regard to the Toronto real estate market and the response to the pandemic is the flight to the suburbs. Some, like CIBC economist Benjamin Tal, suggest the pandemic accelerated the timetables of homebuyers who were considering the move, and there will be a normalization later this year. Odeen Eccleston, one of our regular participants in the Post City Real Estate Roundtable, works with many homebuyers and sellers looking to move out of the city. Post City spoke with her about what she’s seeing on the ground in the GTA right now.
Has the flight to the suburbs continued in recent months now that we have a vaccine on the horizon?
Yes, yes, it has. The trend seems to be continuing. The good news for Toronto condos is that, whereas there was a lull for the past, I’d say, you know, 10 months, I do notice things picking up in the past two months, where things are selling and not just like sitting on the market for too long. So I think that speaks to optimism, and I think real estate speculators and investors are jumping back into the market. But a lot of end-users, they’re still deciding that they want more space. They want more land and are deciding to test out other markets.
So you see more people looking over yonder in other areas outside the city?
I think that a lot of these suburbs were undervalued for a long time, just because of the lack of attention that was on them. But I think with people just sort of considering other options. They realize, wait a minute, these are great cities, a lot of these suburbs, these are great places to raise families, great places to reside. And really, they’re OK with taking the commute to Toronto when they need to, but they no longer need to on a daily basis for work, right.
Will that impact affordability in those areas that were once at a lower price point?
In terms of affordability, it is a little concerning, just because a lot of these suburbs used to be a safe haven for first-time homebuyers. That was sort of where people went if they couldn’t afford Toronto. But now, I’m honestly getting a little concerned: people who can only afford a certain amount, they’re getting priced out of the real estate market, priced out of the GTA market altogether. So that is definitely a negative consequence.
What about property taxes?
Usually a lot of the suburbs, typically already do have higher property taxes than Toronto. So that was one of a laundry list of reasons why people were staying put where they were. But I guess now, when they’re weighing the pros and cons, they’re just, like, OK with the lower price point just to get in. But I think what could happen is that in the coming years as they re-evaluate their situations again, after COVID is over and they realize, my goodness, I’m paying this much?
Do you think there will be some questioning their real estate decisions in the near future?
When people have to go back to driving into work on a more regular basis, maybe they’re realizing now, “I’ve got to pay this much for gas. Now I have to pay this much for property taxes,” because, as I said, typically, I know in Durham Region, taxes, property taxes are, you know, fairly substantially higher than the City of Toronto. That could be more of a long-term implication when things do get back to normal and people are reevaluating again. They’re like, “Darn it, I’m paying this much extra in property tax? I’m paying this much extra in gas to commute?” They’ll have to weigh the pros and cons and ask if it is worth it. For some, I imagine that it will be. But maybe for others, that’s what will then drive them back.
Do you think there will be a correction?
I think it’ll be a mix. And you know what, looking ahead, I think that this could actually have healthy implications on the overall real estate market. Because, in terms of affordability, if a certain amount of people are now open to the suburbs that otherwise weren’t, well, then that leaves a little bit more inventory for people downtown. And then with more inventory comes, you know, increased affordability. So last year, we were talking about this as an affordability crisis. And listen, I think it’s still that the numbers are almost at crisis level, right. But there was a cooling, which, to a certain extent, maybe that was a part of the solution to the crisis. There’s increased inventory, and, you know, prices will inevitably come down a bit.
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