Home Prices Up Over 50% in GTA's Hottest Neighbourhoods

Sunday Dec 11th, 2016



Earlier this month the Toronto Real Estate Board announced that the average price of a detached home in the 905 region was up 29.4% year over year. But as any good math student knows, if the average in the GTA is up 29.4% that means there must be quite a few neighbourhoods that are appreciating at a much faster rate than this.

I thought it would be helpful to take a look at how fast the hottest neighbourhoods in the GTA are actually appreciating. 

To do this, I decided to use a twelve-month average of detached home prices up to and including October 2016 compared to the twelve month average up to and including October 2015. I felt that by using a 12-month average we'll get a better picture of what is really happening and there's less risk of one or two sales skewing the average if I had just used data from October. 

The chart below shows the top ten neighbourhoods ranked by the percent increase in their average sale price from October 2015 to October 2016.

Rural Markham tops the list at 77%, the top 5 neighbourhoods have appreciated more than 50% year over year while the bottom five have appreciated in the 44-47% range. Five out of the top ten neighbourhoods are in Markham, four are in Toronto and one is in Oshawa.

The chart below shows the actual change in average price from one year to the next.

Nine out of the ten neighbourhoods have an average price that is above $1.2M for October 2016.

This last chart shows the percent of detached homes that sold for more than the seller's asking price in 2015 vs. 2016.

Eight out of the ten neighbourhoods saw a big increase in the percent of homes selling for over asking in 2016.

As I wrote a couple months ago, things are very different with Toronto's real estate market this year. This is not the normal competitive Toronto real estate market we've been hearing about for ten years where prices were increasing 6% - 10% annually.

When we see average prices up 30% year over year, there is cause for real concern. One would think that this would motivate Ontario's liberal government to wake up and listen to all the real estate brokers who see a significant amount of foreign speculation behind Toronto's real estate market - but it unfortunately hasn't. Kathleen Wynne's Liberal government has indicated that they do not want to introduce a tax on foreign buyers - similar to the one introduced in Vancouver and to the one recently increased in Hong Kong - to curb foreign speculation.

What's worse, the Liberal government has instead decided to take advantage of this demand from foreign buyers by increasing the provincial land transfer tax on luxury properties. 

The Wynne government's indifference regarding Toronto's out of control house prices and lack of affordability for people who live and work in the GTA is troubling. I can only hope they reconsider their position and take proactive measures to mitigate the impact that foreign speculation is having on Toronto's real estate market.

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