The real estate market in Greater Toronto Area (GTA) suburbia has witnessed a significant surge in demand in recent years.
Skyscrapers tower over the cityscape, as bustling streets become increasingly crowded with people and vehicles.
With this rapid growth, it’s no surprise that many urban dwellers are seeking a respite from the hustle and bustle of city life.
Suburban living, once seen as mundane and uninspiring, has experienced a newfound appeal.
In this article, we will explore the key factors contributing to the increased real estate demand in suburbia in GTA and how it is shaping the future of the market.
Factors Contributing to the Surge in Real Estate Demand in Suburban GTA
The suburban areas of the Greater Toronto Area (GTA) have been experiencing a significant surge in real estate demand over the past few years.
This trend can be attributed to a variety of factors that are driving more homebuyers to seek out properties outside of the city center.
One of the primary factors contributing to the increased real estate demand in suburban GTA is the desire for more space.
Sources: Teranet, National Bank and Bank of Canada calculations
COVID-19 to Big Surbabia is Settling
COVID-19 had what we call in economics a shift in demand when it comes to suburban housing.
People were commuting less and working from home more.
They wanted bigger space and suburbia fit the need.
As urban areas become more congested and housing prices skyrocket, many people are opting for larger, more affordable homes in the suburbs.
The COVID-19 pandemic had only intensified this demand, as remote work has become more prevalent, allowing people to live further away from downtown while still maintaining their jobs.
This shift in lifestyle priorities had driven many potential buyers to explore suburban neighborhoods.
Increase in Housing Prices
House prices in the suburbs of the GTA saw a significant increase during the pandemic. For example, the average price of a home in the GTA rose from $863,599 in early 2020 to $968,318 by the end of the year, marking a 12.1% increase.
Market Trends and Price Dynamics
After peaking in the spring of 2022, the Canadian housing market, including the GTA, experienced a correction.
House prices have trended downward but remain high compared to pre-pandemic levels. As of mid-2024, prices are still below their 2022 peak by around 5% but have shown signs of stabilization.
Interest Rates Impact:
Rising interest rates have increased the cost of homeownership, contributing to a cooling of the market.
Higher borrowing costs have made it more challenging for buyers to afford homes at elevated prices, leading to a moderation in demand.
But this is across the board. Housing prices in the urban markets within the GTA are impacted as well (in fact more so).
Understanding the Shift Towards Suburban Living in the GTA Region
Working from home is slowly going away.
But hybrid work is here to stay (we believe so).
The pandemic highlighted the importance of having more living space, especially as remote work became more prevalent.
Suburban areas offer larger homes and more outdoor space compared to the denser urban core, making them attractive to families and individuals seeking a better quality of life.
Suburbs like Mississauga, Pickering, and Richmond Hill provide a high quality of life with access to green spaces, recreational activities, and good schools.
For instance, Mississauga offers diverse amenities, excellent transportation networks, and a strong emphasis on education.
Impact of Increased Demand on Real Estate Prices in GTA Suburbia
$1500/sqft? Too much? We were getting there in some hot pockets in Toronto.
Affordability remains a key factor driving the move to the suburbs (especially with the interest rate at these highs).
Despite the rise in suburban home prices during the pandemic, these areas often still offer more affordable options compared to downtown Toronto.
According to a study by the RBC-Pembina Institute, 79% of GTA residents cited affordability as a major influence on their housing decisions
Exploring the Appeal of Suburban Living Amidst Urban Development in GTA
With wide open spaces, green parks, and quiet neighborhoods, suburbs provide a much-needed escape from the noise and congestion of the city.
Families with children are particularly drawn to the safety and community-oriented environment that suburban areas offer.
Schools, recreational facilities, and access to nature are abundant, making it an appealing choice for those seeking a more balanced and peaceful lifestyle.
Transit Accessibility:
Many people who moved away from the urban hotpot that is Toronto – are still going to work there.
The beautiful thing about suburban GTA is that many cities in the GTA are well-connected by public transit, making commuting to the city feasible.
For example, Mississauga boasts comprehensive transportation options, including the GO Transit commuter rail and the upcoming Hurontario Light Rail Transit.
Walkability and Amenities: There is a growing preference for walkable neighborhoods with easy access to amenities.
The RBC-Pembina study found that a significant portion of residents would prefer smaller homes in walkable areas with good transit access, even if these homes were more expensive.
Long-Term Trends and Considerations
Interest Has Sustained in Suburban Living (and hence the prices).
While the initial surge in suburban demand was driven by the pandemic, the trend toward suburban living may continue if remote and hybrid work arrangements remain prevalent.
This sustained interest could lead to further development and investment in suburban infrastructure and amenities.
Ultimately, the decision to invest in the suburbs involves balancing various factors such as affordability, lifestyle preferences, and proximity to work and amenities.
Each suburb in the GTA offers unique advantages, and choosing the right one depends on individual needs and priorities.
Urban housing prices in the GTA are expected to rise modestly, supported by lower mortgage rates and stable demand.
However, we believe that the rate of increase in urban markets may be slower compared to suburban areas due to higher base prices and limited space for new developments.
