The term “urban exodus” was coined last year to describe the many homebuyers — and some renters — who opted to move to the Toronto suburbs in search of more space.
The pandemic had them spending more time at home than ever, while record-low mortgage rates opened up opportunities to afford higher-priced homes than what would have been attainable a year prior.
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While the story around the drivers of the urban exodus typically focuses on pandemic-driven changes to homebuyer preferences, there was always an affordability element involved. With long commute times no longer a concern thanks to remote work and the city’s many entertainment options more or less shuttered, why pay a premium to live in an urban centre when a downpayment can go so much further in the suburbs?
But with home prices rising rapidly early in 2021, some market commentators are wondering if the urban exodus will continue for another year, this time driven by fiercely competitive markets and soaring prices forcing buyers to look farther afield for affordable homes.
In a research note published today, Central 1 Credit Union Economist Edgard Navarrete wrote that Toronto’s average selling price remained above $1 million for the second month in a row in February. With interest rates expected to stay low for the foreseeable future and new listings struggling to keep pace with buyer demand, Navarrete believes the market is on course to heat up even further.
“Unaffordability concerns will be stoked significantly in 2021 perhaps leading to another year of significant exodus out of the city due to affordability erosion,” he wrote.
Although it appears likely that Toronto will gradually reopen in the coming months as the vaccination campaign picks up steam, remote work may be here to stay for many employers in the region. Navarrete writes that those not tethered to a workplace in the GTA could very well leave the region entirely for a more affordable community.
All suburban areas in the Toronto region tracked by the Toronto Regional Real Estate Association (TRREB) have been posting double-digit annual price gains in recent months, so a move outside the region could make sense for buyers with lower budgets.
Of the 30 suburban cities and towns tracked by TRREB, only eight had average detached home prices below $1 million in February. During the same month last year, there were 20 suburbs with average detached home prices below $1 million.