What’s Driving Housing Prices in Mississauga?
In winter 2017, the Toronto/GTA real estate market started making headlines across the country.
The early months of the year were defined by shocking bidding wars that prompted houses to sell, in some cases, for $100,000 or more over asking price. This time last year, it wasn’t uncommon to see 100 or more people attend an open house in Mississauga. It also wasn’t rare to see realtors submit bully offers with no conditions.
Now, the market has retained some semblance of balance, but prices are still high.
Why is that?
Well, there are a lot of reasons.
The Canada Mortgage and Housing Corporation (CMHC) recently released a new study titled Examining Escalating House Prices in Large Canadian Metropolitan Centres.
The analysis shows that house prices are being driven by strong economic and population growth and low mortgage rates—something real estate experts have been saying for sometime.
The study also finds that housing supply (inventory) is lower in such major metropolitan areas as Toronto and Vancouver.
The CMHC says the report looked at data from Toronto, Vancouver, Montreal, Calgary and Edmonton from 2010 to 2016. Naturally, the study found that price growth isn’t even across the national board. While Toronto and Vancouver showed large and persistent increases in prices, there was only modest price growth in Montreal.
The study finds that house prices increased by 40 per cent in Toronto over the same time period, with 40 per cent of the rise being explained by conventional economic factors. As far as Mississauga goes, recently released data from real estate website Zoocasa indicates that detached house prices have risen 41 per cent since 2013.
In other categories, Zoocasa found that semi-detached prices have risen 48 per cent, while townhouses and condos have enjoyed upticks of 43 and 44 per cent, respectively.
The CMHC says price increases have tended to be greater for more expensive single-detached housing, rather than for condominium apartments. That said, recent data released by the Toronto Real Estate Board (TREB), indicates current price growth in the overall housing market is being driven by the condominium segment.
That said, the CMHC points out that, as far as inventory goes, there are more condos than low-rise units available.
Still, demand for condos has been pronounced.
“Investor demand for condominium apartments has increased. In turn, this increase lifts the supply of rental properties, but these units tend to be more expensive than units from existing purpose-built rentals. There appears to be a wider prevalence of mortgage helpers as well. Measures targeted at alleviating supply challenges are more likely to have positive impacts on high-priced markets than measures focused on the demand side,” the report reads.
One thing that doesn’t come up is foreign investment, as a 2017 CMHC study found that the rate of foreign ownership in Canada isn’t as high as once believed.
In fact, the data indicates that the share of condos owned by non-residents remains low in the cities the corporation surveyed, with the majority reporting shares of less than one per cent.
The province also recently released Ontario specific data on non-resident ownership and says that individuals who are not citizens or permanent residents of Canada, as well as foreign corporations, accounted for 1.9 per cent of home purchases across the Greater Golden Horseshoe (GGH) region from Aug. 19 to Nov. 17, 2017.
So while low inventory appears to be a persistent problem, no one is quite sure how to address it just yet.
“While it is true that the supply response in Toronto and Vancouver has been significantly weaker than in other Canadian metropolitan areas, we do not fully know why this is the case,” says Evan Siddall, president and CEO, CMHC.
“There continues to be data gaps and we need to work more closely with jurisdictions at all levels to fully understand what is happening. Large Canadian centres like Toronto and Vancouver are increasingly behaving like world-class cities. Their strong local economies and historically low interest rates make them attractive to both people and industry which drives up demand for housing. When you have weak supply responses, as you do in these markets, prices have nowhere to go but up. Alleviating these pressures lies in finding ways to increase supply and that is a shared job for jurisdictions at all levels.”