The real-estate affordability dilemma: move up or move out

It’s still possible to find less costly options in the new-home market, but average consumers will need to make some form of sacrifice.
The most common type of new home currently being developed in the GTA is the one-bedroom highrise condo unit.

Before the introduction of intensification policies in Ontario just over a decade ago, detached houses on 40-foot lots were the dominant form of residence.

That’s a big difference in just a decade — a dramatic shift that should focus the minds of planners, policy-makers and development industry professionals as they work to lay the groundwork for the GTA real estate market going forward.

While affordable ownership options still exist in the new-home market, maintaining these options amid the continual intensification of the GTA will require government and builders to not only collaborate, but more importantly, innovate.

The average cost of a new highrise home at the end of February was $453,999, according to Altus Group’s High Rise Price Index. For those who want more space than that, and are looking for a traditional detached home on a 40-foot lot, options still exist. But these homes are in extremely short supply and, as a result, very expensive.

There were only 415 options for detached homes on 40-foot lots across the entire GTA at the end of February, according to Altus Group, and prices varied widely depending on location. In Halton Region, the average price was the most expensive: $1,027,427; in Peel Region it was $816,147; in York Region it was $783,088.

For house-hunters who can’t afford those prices yet still want the space and style that a detached house offers, the only course of action is to move farther afield into the Greater Golden Horseshoe.

Consider market conditions in the GTA’s western reaches, for example. An additional 40-minute commute (each way) opens up for consideration Waterloo Region, where the average price of a new detached house on a 40-foot lot is just $521,488. That’s between $300,000 and $500,000 less expensive than Peel or Halton Regions.

Then there’s the north GTA. Tacking on an extra 30 minutes to your commute gives you access to the South Simcoe market, where the average price of a new detached home on a 40-foot lot is a mere $534,522 — almost $250,000 less expensive than York Region.

It’s still possible to find affordability in the new-home market, but average consumers will need to make some form of sacrifice. If you’re prepared to give up space, high density housing is an affordable option. If you don’t mind adding to your commute time, a detached home farther out in the Greater Golden Horseshoe is a price-smart possibility.

You can move up, or move out — either way, housing affordability won’t come easy.

Sat., May 14, 2016