Low- and middle-income families vanish as urban neighbourhoods gentrify

In Toronto’s East York neighbourhood, modest postwar houses are giving way to much bigger ones. JAMIE STURGEON/GLOBAL NEWS

Older neighbourhoods in the east and west ends of Toronto seem like construction zones — the whine of power tools fills the air and dumpsters fill with century-old lath and plaster. Often, modest houses built after the Second World War are torn down to build something much bigger. Home prices rise, and rise some more. Neighbours gossip about the first seven-figure sale.

Over time, historically hardscrabble working-class neighbourhoods turn into quite different ones as renters give way to homeowners and the personality of retail strips change.

Who wins, and who loses? As housing improves and prices rise, neighbourhoods become inaccessible to first-time buyers, and also to the low-and middle-income families that used to live there.

That shift is reflected in tax data obtained from Statistics Canada by Global News. We looked at 10 years of tax data from returns filed between 2004 and 2013.

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It shows a dramatic fall in low- and middle-income couples in once-affordable neighbourhoods in Toronto and Vancouver. Almost a thousand couples earning less than $60,000 left one east Toronto neighbourhood over the decade, and about 700 left one area of East York.

In the city’s old west end, five postal areas roughly between Bathurst and High Park lost thousands more.

Further west, low-income families are also vanishing along the lake shore from Long Branch to Port Credit.

Percentage change in couples earning $60K or less, 2004-13 »

Percentage change in couples earning $60K or less, 2004-13

Reasons why

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What’s fuelled this widespread gentrification? A complex combination of factors, but leading the charge has been ultra-low interest rates as well as a still-rising wave of capital from foreign buyers, experts say.

With interest rates seemingly permanently fixed at record low levels, buyers — with or without high incomes — have never been able to afford as much house as they’ve been able to in recent years. The current rate environment has significantly hastened a repopulating of formerly working-class urban neighbourhoods with middle- and higher-earning households, the data shows.

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MORE: Home loans are getting even cheaper in Canada

Though reliable information on foreign ownership levels is still very much a scarcity, there’s a mountain of anecdotal evidence that suggests the strong price growth in recent years is also being stoked by foreign demand, as international capital seeks the perceived safety of Canadian real estate.

It’s perhaps not a coincidence that double-digit surges in Vancouver and Toronto home prices over the past year has coincided with a financial crisis in China.

Percentage change in couples earning $60K or less, 2004-13 »

Percentage change in couples earning $60K or less, 2004-13

The data doesn’t capture people too poor to file tax returns. The data we have isn’t possible to adjust for inflation, but it was about 17 per cent over the 10-year period.

In the traditionally higher-income neighbourhoods in the city’s central spine along Yonge Street, there were few low-income families in the first place.

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Neighbourhoods near the subway in Toronto are in high demand, says veteran real estate agent Wilfred Veinot, who’s based in the city’s east end.

“Anything that’s within a 20-minute walk of the subway line is incredible real estate. A lot of people are not going to be able to afford the car, and they don’t want to get on the streetcar, or the bus, because they’re stuck behind all this traffic.”

In the process, though, low-income people lose access to high-quality transit as well as social support networks.

READ MORE: Unreal Estate: Our look at Canada’s red-hot housing market

Three groups

Three groups are affected by the way these neighbourhoods change: the gentrifiers, the people displaced by the gentrification, and the buyers who came late to the gentrification. They have conflicting interests: the gentrifiers benefit, the former residents are pushed further from the core away from support networks and high-quality transit, and potential buyers are shut out — in part because there are fewer people to displace.

When he started selling east-end real estate in the ‘80s, South Riverdale used to be quite accessible to tough-minded home buyers willing to polish a rough diamond, Veinot says.

“People have moved into the neighbourhood, with all the best intentions, because it’s close to the water, and it’s close to downtown. You can see why it’s a great place to live, but people are more marginalized in their own community.”

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Veinot describes his clients as professionals, like doctors and lawyers. “That’s who I’m primarily dealing with. I’m not dealing with anybody who works retail, or anyone like that — I don’t know how they’re going to get into the market.”

Displaced former residents go to the suburbs, explains Lynne Raskin, executive director of the South Riverdale Community Health Centre on Queen St. E..

“What happens is that people are forced to move outside the city. The transportation system isn’t what it ought to be, they’re losing their community, they’re losing their support, their neighbours.”

“In 10 years, I don’t know if this is going to be a place where we are needed,” Raskin reflects on the gentrification of East York. “The cost of housing in Toronto is escalating, so what does that mean? Your prediction is as good as mine. Things are changing very rapidly.”

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