GTA home prices spread outward

High house prices in the Greater Toronto Area are spilling over into nearby markets, especially those within commuting distance, according to the latest report from Canada Mortgage and Housing Corp.

Historically, prospective homebuyers who have found themselves priced out of the GTA have migrated to Hamilton, Barrie and Guelph to buy single-family homes, according to CMHC. But the federal housing agency says that most recently, people have been moving even further out, especially to the St. Catharines-Niagara region.

As the price of lowrise homes in the Toronto area has soared, house prices in nearby communities such as Hamilton, Barrie and Guelph have also been driven up, said Jean-Sebastien Michel, principal of the market analysis centre at CMHC. According to CMHC, Hamilton — roughly 70 kilometres from Toronto — is the Ontario market that’s most sensitive to housing prices within the Greater Toronto Area.

As the price of lowrise homes in the Toronto area has soared, house prices in nearby Hamilton, Barrie and Guelph have also gone up

The report estimates that a 1-percent change in GTA house prices could increase or decrease Hamilton prices by 2 per cent after three years.

A similar but smaller multiplier effect would be felt in Guelph, Brantford, Kitchener, Barrie, Peterborough and St. Catharines, which is about 112 kilometres from Toronto.

Tim Hudak, CEO of the Ontario Real Estate Association, says the lack of supply is the main factor behind soaring detached home prices in the GTA.

“One way to increase housing stock is to allow developers to build more ‘missing middle’ housing types, like townhomes, duplexes and stacked townhomes. Increasing the housing stock is necessary to give buyers more options at affordable levels, in areas that make sense for them to be in.”