Monthly Archives: December 2010

Three Cities Report: Gentrification and Decline in Toronto

Bathurst Station 1970

A new report from the Cities Centre at U of T contains compelling data about Toronto’s neighbourhoods. The report, titled The Three Cities within Toronto, presents evidence of increased polarization of wealth. Downtown and central areas have become proportionately more wealthy over the past 35 years, while many parts of the east and west suburbs have become relatively poorer. A big concern is the apparent hollowing out of the middle-income population.

A team of researchers headed by Prof. David Hulchanski has been tracking long-term changes in Toronto’s demographic makeup. From a starting point in 1970, the team has tracked the changing patterns of wealth distribution within Toronto (formerly Metro Toronto) as well as in the surrounding 905 area. There is a trove of fascinating data contained in the report, especially in the various maps and tables which track the evolution of the social changes.

The maps in this report make one thing clear: back in 1970, Metro Toronto was far more homogeneous in terms of income distribution than it is today. Some older areas of the city have changed from relative poverty to affluence over the time of the study. Many more areas, however, especially in Etobicoke and Scarborough, have dropped from a middling position to a level where local average incomes are more than 40% below the Toronto average levels. The report carefully documents its methodology, in particular to justify its reliance on individual income data as opposed to household data.

As real estate agents, we are clearly concerned to identify areas that may be expected to out-perform or under-perform in terms of property values. We are also concerned to look for the underlying causes of these long-term changes. On first blush, several priorities emerge for our declining areas: we need to improve public transit, aggressively update the quality of older tower apartments, and support better access to basic shopping.

The report is concise, easy to read, and attractively presented (the excellent graphic work is by Matt Blackett, of Spacing.) I recommend it as good holiday reading. There may be a variety of answers, but we can’t duck the questions.

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GTA Market Report – Dec. 3, 2010

 

Toronto monthly house sales chart

November price update

As the chart shows, Toronto-area home sale values are continuing on a predictable path. The average sale price in November was about 4.7% higher than in November, 2009. Around 6,510 homes were sold during the month, about 13% fewer than in the same month last year. It’s clear that we’re now seeing a typical month-over-month pattern of change, after a period of volatility which started in late 2007.

Since December is prediction time, here goes! In 2011, we say Toronto prices will rise, but much more gently than in 2010. (The final year-over-year number for 2010 will be exceptionally high.) Mortgage rates may also show some upward movement, but not at a level that would have a major effect on buyers.

Leading housing economist Will Dunning makes projections for 2011 that broadly parallel our observations. He sees the same overall pattern, citing “a sequence of temporary factors [which] has distorted housing activity during the past two years, but those factors now appear to have been played out.” He predicts stable prices, while expecting that the number of home resales in 2011 will be lower than in 2010, and that sales of new construction high-rise condos will also drop next year.

Mortgage rates

Mortgage rates have stubbornly refused to rise significantly, despite several alarms this year. When rates do finally rise, it will likely be a signal that economic recovery is well under way. In 2011, Toronto homes will continue to be affordable, thanks to the combination of stable pricing and record-low rates. While some economists would like to raise the cost of consumer credit, including mortgages, it’s clear that policy makers are looking for signs of more robust growth, especially south of the border, before allowing rates to increase.