Despite a rather flat landscape for home prices across much of Canada, Toronto and southern Ontario continue to shoot skyward, January data shows.
Home prices in Greater Toronto saw an increase of 22.6 per cent in January compared to the same month last year, according to the Toronto Real Estate Board. But prices in nearby Oakville, Milton and Guelph also recorded staggering double-digit increases.
The average home price in Toronto now stands at $770,745. In Oakville prices pierced through the $1-million mark in January. In Guelph, a 1.5 hour commute from Toronto, you’re looking at $475,717.
READ MORE: What the housing market could look like in 2017
The affordability crisis in Toronto and surrounding regions stands in stark comparison with a 2.9 per cent year-over-year decrease for Calgary’s home prices and 1.0 per cent dip in Saskatoon. Regina, Ottawa, and Greater Montreal recorded unremarkable increases, roughly between 3 and 4 per cent. And with Vancouver prices continuing their gentle decline from their August peak, Victoria and Vancouver Island were the only areas outside Ontario to see strong growth.
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So what’s pumping southern Ontario’s prices?
One oft-quoted factor is the effect of B.C.’s 15 per cent tax on foreign buyers in Metro Vancouver, which took effect Aug. 2. The measure appears to have sent international investors house hunting in Toronto, as well as Victoria and Seattle.
WATCH: The federal government announced in October measures to close a tax loophole used by foreigner buyers.
Another likely cause of skyrocketing prices in southern Ontario is a shortage of housing stock. In Toronto, buyers priced out of the market for single homes and semis seem to have piled into condos, only to discover that there aren’t enough of them. A lull in new condo units coming onto the market has pushed the unsold stock to a 10-year low, according to data compiled by Toronto-based Urbanation.
But what the Canadian Real Estate Association has called a supply-demand mismatch “without precedent” extends well beyond Toronto to areas like Hamilton, Kitchener-Waterloo, the Niagara region, and Barrie and nearby cottage country, in addition to Oakville and Guelph.
WATCH: International Monetary Fund’s Managing Director Christine Lagarde speaks about the housing markets in Canada, specifically in Toronto an Vancouver and as well how to possible prevent any risks in those markets.
Still, there’s a third factor that may have helped push up demand and prices: Ontario has welcomed record numbers of new residents in 2016.
Migratory flows are often quoted in passing by analysts and economists as a possible contributor to Toronto’s tight housing market, but details are usually scarce. So Global News took a close look at the data. Here’s what we found:
Immigration from outside Canada to Ontario is the highest it’s been in 5 years
New international arrivals shot up in 2016, after the Liberals lifted the federal immigration target range to between 280,000 and 305,000 people in 2016, up from 260,000 and 285,000 the previous year. In the twelve months up to September 2016 the province saw a net inflow of nearly 86,000 people, the highest since the 2009-2010 period, according to Statistics Canada data.
Around 35 per cent of immigrants coming to Canada settle in Ontario. And about 75 per cent of those who pick Ontario make their new home in and around Toronto.
Arrivals from other provinces are at record highs
Canadians are also moving to Ontario in droves.
“Over the last 12 months, Ontario saw net inflows of 16,700 people through interprovincial migration, an improvement compared to net outflows of 6,400 the previous year,” Ontario Finance Ministry spokesperson Scott Blodgett said via email.
Net arrivals from other provinces were just shy of 11,600 people between July and August of 2016 alone, well above the previous peak in 2000.
The largest net influx — nearly 4,300 people in the third quarter alone — was from Quebec, which has long been the top source of interprovincial immigration to Ontario.
But what has been really tipping the scales is arrivals from the crisis-battered West. Alberta alone sent a net 2,700 people to Ontario between July and September of last year, likely a mix of Albertans and returning Ontarians, both looking for jobs.
“The third quarter of 2016 was the fourth consecutive quarterly net interprovincial migration gain with Alberta,” said Blodgett.
The flow of arrivals seems to have picked up just as the Alberta economy appeared to bottom out, but that’s hardly unusual. It takes some time for corporate losses to translate into layoffs and for unemployed workers to make the difficult decision to relocate.
Unlike international immigrants, Canadians resettling in Ontario are more likely to disperse around the province. For those who do choose Toronto and nearby regions, a grueling house-hunt awaits.