Tales of big city buyers pushing prices higher in small towns has more data confirmation. Teranet, Ontario’s private land registry operator, conducted a study on provincial migration. They found existing homeowners migrated in record numbers over the past 3 quarters. Owners fleeing Toronto paid much more than the average migrating household as well. This likely exported home price exuberance from the city to the rest of Southern Ontario.
Ontario Homebuyer Migration
Data scientists from the land registry operator looked at homeowner migrations throughout Ontario. Migration in this study is defined as buying a home in a region covered by another land registry office. That is, only existing homeowners are covered in the numbers.
Ontario Homeowner Migration Volumes
Purchases from one office to another imply a considerable amount of distance traveled. Whereas a buyer registering in the same office would be in the same city, and is likely to be an upgrade or downsize. They did this for the past 10 years of data, which have been some of the busiest on record.
Ontario Hasn’t Seen A Larger Month of Migrations
Ontario homeowners recorded several records for migration, starting in the second half. The province recorded 8,499 homeowners migrating in October 2020. This beats the June 2017 monthly record. For those that need a reminder, Ontario experienced a single-family mini-bubble during 2017. Prices that year quickly escalated to the largest annual growth in Toronto’s history. Buyers fled to the suburbs before a brief correction followed.
Ontario Household Migration Increased By 57%
Quarterly volumes emphasize how this trend accelerated into the end of the year. The third quarter of 2020 saw homeowner migrations jump 12.99% from the same quarter a year before. This is a very large rate of growth that kept getting larger. In the fourth quarter, migration volumes surged 45.2% from a year before. It was the biggest quarter in recent history, and likely ever.
Homeowner Migrations By Quarter
The first quarter of this year saw an even larger rate of growth somehow. Migrations in the first quarter of 2021 increased by 57.2% from a year before. It was the largest number of migrations in any recent first-quarter recorded. It sets the stage for a very big year of migrations if things don’t cool down.
Migrations Were Still Under The 2017 Record
Full year numbers were very large but didn’t quite clear the record set a few years back. Homeowner migrations came in at 68,794 households in 2020, just below the record in 2017. They didn’t specify the exact number for 2017, but it’s clear 2020 was weaker in the first and second quarters. It is worth noting that 2017 was also artificially weakened due to policy shock. Ontario’s rollout of a non-resident speculation tax slowed all transactions, including resident buyers.
Toronto Homeowners Had One of The Biggest Outflows Ever
Migration out of Greater Toronto represented a significant chunk of migration. Homeowner net migration for Toronto hit -13,792 in 2020. A negative value means more homeowners left the city than arrived. It comes in at just under the record of -14,808 in 2017. These existing homeowners would have seen a large increase in equity over the past few years. This likely contributed to pushing prices higher in other parts of the province.
Greater Toronto Net Migration of Homeowners
Toronto Households Migrating Paid Up To 32% More Than The Provincial Average
Toronto homeowners that migrated paid much more than the rest of the province. Toronto homeowners migrating from a condo to a non-condo home paid an average of $874,000 in 2020. This is about 5% higher than the average of similar buyers across the province.
A similar trend was seen in other home types, like those migrating to another non-condo. Toronto households migrating to another non-condo paid an average of $844,200. This is 32% higher than the average for similar buyers across the province. Huge gaps in the difference of price, especially when swapping a non-condo.
GTA Homeowner Migration Average Transfer Value
Anecdotal evidence of homebuyers migrating across Ontario was abundant, but not data. The Bank of Canada study on home price growth accelerating outside of the city was about it. The Teranet study confirms it’s not just anecdotal though. It gives credibility to the stories of Toronto buyers sparking bidding wars in the country.
They may not have bought every house outside of the city, but they helped set the price. Using frothy gains made in Toronto as down payments, they took exuberance provincial-wide.
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