The urban lifestyle lost some of its lustre through the spring as the pandemic shuttered nightlife and cultural attractions and most city dwellers became wary of everyday activities like riding the subway or taking an elevator.
Along with the clear advantages of having a larger home when it comes to remote-working arrangements and generally spending more time inside, this led to much speculation that the pandemic would drive a shift in homebuyer preferences to more suburban properties.
During June and July, when homebuyers returned to the market in droves after a quiet spring, this hypothesis appeared to have been borne out in home sales data.
In an analysis of the most recent Toronto home sales figures, RBC Senior Economist Robert Hogue wrote that strong low-rise home sales in the city’s 905 suburban area “supports the notion the pandemic is driving more buyers to the suburbs.” Indeed, housing markets in the suburban areas of the GTA have recovered much faster than the city itself through the summer.
But researchers from Ryerson University’s Centre for Urban Research (CUR) wrote last week that this apparent shift in homebuyer interest to the suburbs is likely just another example of the pandemic accelerating an existing trend rather than giving rise to a new one.
In a blog post, CUR researchers Frank Clayton and Daniel Bailey said that Toronto’s resident population “has been leaving for the 905 area and beyond since 2016, suggesting that some other fundamental factors are at play” besides pandemic-induced changes in preference.
First, Clayton and Bailey noted that the 905 area grew steadily in its share of home sales happening across the GTA. In 1996, homes sold in the 905 accounted for 56 percent of all sales that occurred in the GTA. By 2016, this share of sales increased to 62 percent.
Following a period of weakness through 2017 and 2018, the 905 bounced back in 2019 and its share of sales has been recovering through 2020.
“This recent shift in the volume of sales to the 905 area is not unexpected. In a 2017 CUR study of Millennials, we found that most Millennials surveyed expressed a preference for ground-related homes, which are more affordable and abundant in the 905 area than in Toronto,” Clayton and Bailey wrote.
The researchers wrote that this long-term trend has also been playing out in the new home market.
“There has been a pronounced shift in GTA [new home] sales to the 905 area in the first two quarters of 2020 relative to a year ago. In the second quarter, nearly three out of four GTA sales were for [new] homes located in the 905 area,” they wrote.
Again, this homebuying preference shift predates the pandemic, Clayton and Bailey argued.
According to data from Altus Group, the 905’s share of new home sales reliably made up over 50 percent of the GTA’s total since the early years of the 21st century. This share shrank to a multi-decade low of 43 percent in 2018, with the researchers citing a “surge in high-rise apartment demand in central Toronto and along subway lines.”
But the situation rapidly reversed well before the pandemic hit, with the 905 bouncing back to 59 percent in 2019, and the trend showing signs of continuing ahead of COVID-19 spreading widely throughout the region in March.
Like the resale market, Clayton and Bailey said that a majority of Millennials still see themselves in a suburban home rather than an urban condo.
“A continued shift away from Toronto is expected since, based on their stated preferences, Millennials will be moving into the market for more affordable ground-related homes,” they wrote.
