When it comes to GTA real estate and Canada as a whole, is Oshawa primed to become one of the hottest housing markets amid a pandemic?
The city recently made national headlines after Statistics Canada reported in January that Oshawa is one of the country’s fastest-growing areas. Over the past year, its population has increased more than two per cent, receiving an influx of more than 10,000 new residents. The primary factor driving this growth is that many Toronto households are searching for larger homes at a lower price than what they would find in the major urban centre.
For years this “bedroom community” on the eastern edge of the GTA avoided the spotlight, but is now rather quickly pushing its way to the top as a popular destination for families, young couples and real estate investors. It was only a matter of time, says Mayor Dan Carter.
“I think our day has come and I think we’ve been building towards this for some time. We’re affordable, we’re a safe city. We have great amenities here. We’ve got unbelievable post-education,” Mayor Carter said in a statement. “They’re seeing that they want to have a different experience in their life. They want to have more space, they want to be outside and enjoy the green space.”
Has this translated into a more lucrative housing market? Despite having one of Ontario’s most affordable real estate sectors, Oshawa has seen incredible growth over the last year. But did Oshawa start 2021 with the same level of momentum? And, if it did, can the city sustain it in 2021?
GTA Real Estate: A Peek Inside the Booming Oshawa Housing Market
The Oshawa real estate market has been off to an impressive start in 2021, looking to build upon the momentum from the sudden population boom.
According to this January market data, residential sales rose 17 per cent from the same time a year ago, to 213 units. The average price for a home in Oshawa was $649,000 in January, rising 16.7 per cent year-over-year. Here is the average price by home type:
- Detached: $832,217
- Townhouse: $672,528
- Condo Apartment: $373,506
Despite the COVID-19 public health crisis and the province’s decision to lockdown Ontario close to a year ago, the local Oshawa real estate industry has remained robust, with the average listing remaining on the market for only 10 days.
“The strong demand during the spring market pushed a fast recovery for Durham’s housing market. Record residential sales were reported on a monthly basis,” said Michael Watson, the president of the Durham Region Association of REALTORS® (DRAR), in a news release. “Digital marketing tools and virtual open houses allowed for safe interactions as the demand for homeownership remained strong. Low borrowing costs will continue to fuel the housing market recovery.”
Industry observers are now focusing on active listings and housing starts to better measure Oshawa’s inventory levels. In January, there were 72 active listings. Housing starts also swelled considerably last year, soaring 56 per cent to 2,666 in 2020.
It was also recently reported that new subdivisions are currently under construction, and additional land had been approved for subdivision development. Oshawa is in a position to meet the needs of the market; something that many smaller towns or rural communities were unable to do over the last several months as out-of-town buyers flooded the markets, scooping up the limited inventory of properties.
Oshawa and Durham Region in 2021
The broader Durham Region housing market is poised to record strong numbers over the next 12 months as the relocation from urban areas continues.
According to the RE/MAX outlook for Durham residential real estate in 2021, experts anticipated a three-per-cent increase in the average price to $717,241 across all property types, with housing demand on track to outpace supply levels. Move-over buyers are expected to drive demand in the area, concentrating their home-buying efforts on two-storey detached houses and townhomes. Oshawa is expected to be the most in-demand municipality in Durham, followed by Clarington and Whitby.
In addition to ultra-low borrowing costs from near-zero interest rates laid out by the Bank of Canada (BoC), the Oshawa housing market will be supported by other notable factors. These include the return of immigration, work-from-home policies and mandates, and expanding infrastructure in the region.
Aside from the economic factors increasing the appeal of this GTA city, Oshawa possesses an abundance of sights, sounds and flavours that are luring homebuyers from outside the city. The Canadian Automotive Museum, the Oshawa Valley Botanical Gardens, the Ontario Regiment RCAC Museum, the Darlington Provincial Park, and the Oshawa Zoo serve as some of the larger attractions, but the downtown strip is also garnering some attention. Gastro-pubs and foodie hot-spots are slowly transforming Oshawa’s downtown core, as well as surrounding the recently expanded Oshawa Centre, which has for years served as the Durham Region’s premiere shopping destination.
Oshawa has everything most consumers would want: nearby amenities, excellent sights and sounds, growing infrastructure, and a rebounding economy. Only about an hour outside of Toronto, by GO train or car, it is understandable why Oshawa is becoming an attractive place to plant roots. But if it is impressive now, then one can only imagine what Oshawa will be like 10 years from now as the city shows promising signs of evolving and expanding to keep up with demand.
Canada housing starts fall 19.8% on month in April
The seasonally adjusted annualized rate of housing starts fell to 268,631 units from a revised 334,759 units in March, Canada‘s national housing agency said. Analysts had expected 280,000 unit starts in April.
(Reporting by Julie Gordon in Ottawa; Editing by Gareth Jones)
Towns grapple with big-city-like real estate boom
Small cities and cottage towns across Canada are grappling with the fallout of surging popularity amid the COVID-19 pandemic, as urbanites flock in, driving up home prices with big-city-style bidding wars and putting pressure on municipal services.
The growing demand has led to some small Canadian communities seeing house prices jump more than 75% in one year.
“The small towns are getting hit hard. They’re getting interest like they’ve never had before,” said Stephan Gauthier, an Ottawa real estate agent who is increasingly helping clients buy in villages well outside the city. (Graphic: Annual price gains in select Canadian cities and towns,)
The eye-watering gains in Canada are mirroring similar trends in New Zealand, Australia and Britain, where rural home prices are accelerating faster than in cities as avid buyers rush to snatch up cheaper small-town properties and as white-collar workers bet on being able to work from home even after the pandemic ends.
The boom in Canada has builders flooding into smaller communities. More homes mean more demand for drinking water and wastewater treatment, forcing some towns to fast-track expensive infrastructure projects.
For locals, the influx of city people is a double-edged sword. New residents are breathing life and diversity into places where – before the pandemic – schools were closing and many businesses struggled through the winter.
But the soaring housing prices are locking locals out of the real estate market, and competition for rentals means many people can no longer afford to live locally, leaving small-business owners scrambling for staff.
Even existing homeowners, whose home values have risen sharply, are unable to move up the property ladder as the gap to the next rung widens past their means.
“You want people to come here and help build the community. But at what cost to the people who have been here for literally generations?” said Nancy Cherwinka, who lives in Prince Edward County, a peninsula in Lake Ontario known for its wineries and beaches.
MOVE TO THE COUNTRY
Roughly 75,000 people left Toronto and Montreal – Canada‘s two biggest cities and main COVID-19 hot spots – for other parts of their respective provinces of Ontario and Quebec in the year up to July 2020, the largest such migration since at least 2001, according to the latest Statistics Canada data.
For Prince Edward County, about 200 km (125 miles) east of Toronto, that migration has helped drive house prices up 78.5% on the year, putting ownership out of reach for many local residents. The average selling price of a home there in April was C$740,112 ($610,000).
“Now the rental market has gone nuts,” said Chuck Dowdall, executive director of the Prince Edward County Affordable Housing Corporation, with potential home buyers giving up on buying, and renting instead.
The rental crunch is making it difficult for small businesses to hire and retain staff, even if they pay above minimum wage.
It is a struggle that Samantha Parsons and her husband, owners of Parsons Brewing Company, know well. They built a small bunkhouse next to their brewery to house workers temporarily and have even had staff stay with them. This year, they arranged a lease for a three-bedroom home for employees.
“You have to be creative,” said Parsons, adding they still lose out on talent because of the housing challenge.
IF YOU BUILD IT
To tackle the housing crisis, Prince Edward County is planning for more than 3,000 housing starts through 2026, including dozens of below-market rental units.
That boom is putting pressure on municipal services, notably aging water infrastructure. The region is hastening plans to spend C$68 million ($56.2 million) on its water and wastewater system, with developers on the hook for much of the bill.
New-home construction is also surging in other smaller centers across Canada, with rural starts in the first quarter of 2021 at their highest point since 2008. (Graphic: Canada rural housing starts, )
In Collingwood, Ontario, a four-season resort town about 145 km (90 miles) northwest of Toronto, the population boom has forced the community to pause all new-home construction while it sorts out how to address its critical water shortage.
In Nelson, a former mining town in British Columbia’s Kootenay mountains, a pandemic-driven explosion of infill and coach housing is forcing the small city to expand its wastewater and water infrastructure sooner than planned.
“We were heading down that road anyway … but now it’s been accelerated. So that’s going to put us a little bit on our back foot,” said Mayor John Dooley, adding that the sewage treatment plant alone will cost about C$25 million.
Dooley said Nelson hoped to split the costs with the province and federal government.
Back in Prince Edward County, about half the children at a rural daycare are new to the community since the pandemic. At the sister daycare in town, a quarter of students are newcomers. Enrollment at local schools is also up, reversing a trend that had led to closures in previous years.
More young families living in the community will ultimately be beneficial, said Cherwinka, as long as they stick around once life goes back to normal.
“Hopefully they stay, hopefully it’s not just a pandemic solution,” she said. “Hopefully it’s long term.”
($1 = 1.2092 Canadian dollars)
(Reporting by Julie Gordon in Ottawa; Additional reporting by Andy Bruce in London; Editing by Peter Cooney)
Canadian home prices, sales to moderate but remain high
By Julie Gordon
OTTAWA (Reuters) -Canada’s home sales and price growth will moderate over the coming years from the unsustainable levels of 2020, but remain elevated, with housing starts expected to stabilize by the end of 2023, the national housing agency said on Thursday.
While the pace of price growth is expected to ease as mortgage rates increase and buyers face already high prices, home prices could climb 14.4% on average in 2021, the Canada Mortgage and Housing Corporation (CMHC) forecast in its spring market outlook.
Its report does not forecast any annual price declines in the 2021-2023 period.
“Economic conditions are expected to return to pre-pandemic levels by the end of 2023 … This includes the pace of home sales and prices, which we expect to see moderate from 2020 highs over the same period,” Bob Dugan, chief economist at the CMHC, said in a statement.
Dugan warned that significant risks that could impact the forecast include the path of the COVID-19 pandemic, a faster-than-expected increase in mortgage rates, and a reversal of the urban exodus that has driven up prices outside large cities.
The CMHC said last May that it expected housing starts, sales and prices to plunge amid the pandemic, with prices not expected to recover to pre-pandemic levels until 2022.
But home sales and prices soared to record levels, with the average selling price up 31.6% in March 2021 from a year ago. Housing starts also hit a record high in March.
Rental demand is also expected to recover through 2023 as immigration and inter-provincial migration resume, and as students return to campus, the agency said.
(Reporting by Julie Gordon in OttawaEditing by Paul Simao)
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