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.
Like this post? Like us on Facebook for the next one in your feed.
Not even just big cities. I’m in Hamilton, and prices started to explode when Toronto buyers started to come down here. It’s like they go “oh, if it’s $1.5 million in Toronto, $1 million is a deal!” Without any logic other than it’s cheaper.
This is a really good point. Ontario home prices aren’t being driven by wages, they’re being driven by Toronto’s bubble equity. The most important reason you can’t just let one city collapse in a bubble, because locals that can’t make the money will need to take it elsewhere.
Everyone who told people to “Just move” if they couldn’t afford to buy or upgrade in Toronto, well, this is what you get. Now a house in the North End of Hamilton costs $900k. Great job, everybody.
I can’t tell you how many times I’ve been told by elder Gen Xers and Boomers to move since I can’t afford to live here (I’m not in TO — born and raised and still live in the BC lower mainland). I decided to follow their advice, and I’m moving to the Cayman Islands. It’s expensive AF there too, but the quality of life is better and my new job will pay far more money than I could ever hope to make here.
Not to mention your income will be tax free, and high quality health care is relatively cheap and usually partially subsidized by your workplace.
Looking forward to that tax-free income. Yes I believe that all employers are required to cover a certain percentage of health insurance there. I lucked out and was hired by a firm that provides 100% medical, dental and vision coverage. BTW I always enjoy reading your comments Trader Jim!
“Just move” isn’t about “realistic advice.” It’s about hating cities and young people (defined as “anyone younger than you.”)
It’s never made sense to me. If I move from Toronto to Niagara, and decide I’m gonna power commute 90+ minutes each way, I have (kind of) solved my affordability problem (at great non-monetary cost), but I’ve also now made my problem someone else’s problem, because someone working and living in St. Catharines or Welland now has to compete with my big dumb Toronto salary. “Just move” doesn’t FIX anything. It just spreads the problem around.
I couldn’t agree more. Telling people to move fixes absolutely nothing and causes a terrible domino effect on other towns and small cities. There is nowhere to move to in the lower mainland anymore. Even Kelowna and Kamloops are insanely expensive now. Just like the places surrounding TO, rents and real estate prices in suburbs like Abbotsford and Mission are sky high now, and you get to enjoy a 4 hour round-trip commute to Van if you take transit. If you bought in before the market went nuts, have the bank of mom and dad to help you, or make a huge income, you’re fine; on the other hand, if none of these things apply to you and you’re a single working-class schmuck like me, you don’t have a bright future here. For a few years I thought that the market would correct, but now I don’t think it ever will. The unchecked inflow of dirty money, rampant speculation, investment, low interest rates, foreign students, massive immigration, AirBNB, and government mandate to keep prices high all lead me to believe that the insanity will never stop.
Government mandate included massive monetary & fiscal policy measures to “print” money via mortgage lending to juice up liquidity to inject a boost to the overall economy ahead of a predicted pandemic-induced recession. Basically, our leaders (GOC, BOC, Big Banks etc) sacrificed housing affordability to maintain a strong economy.
Heck, this was going on long before the pandemic. After resource extraction (i.e. oil) went to crap our economic leaders eagerly exploited the next best thing to fuel the economy….Canadian housing.
I can’t help but think that it’s just laziness, lack of creativity, greed, unwillingness to do the hard work but ready to exploit the low-hanging fruit for full monetary gain. What next? Canadian water?…oh yeah. That’s already happening…..
At what point do we all question paying taxes to a country we can no longer afford to live in. The system has never been more broken.
No market in the province has a typical home price below $500,000. England can fit 10x into Canada, with 10x the population, and we still can’t get home prices below that because the government needs tax revenue from transfers .
50+ bids on one cottage the other day, and it went for the price of a detached home in Hamilton… but without any of the infrastructure, nor did it have a view. Location doesn’t even matter in Canada anymore, it’s just every house everywhere is worth a bajillion dollars.