Shift in GTA’s Real Estate Demand to the 905 Area from Toronto Started Before COVID-19
By: Frank Clayton and Daniel Bailey
August 14, 2020
News reports are highlighting an exodus of people from the city of Toronto to the 905 area (Durham, York, Peel and Halton) of the Greater Toronto Area (“GTA”) since the beginning of the COVID-19 pandemic shutdowns of March of 2020. CUR’s recent research, however, shows that Toronto’s resident population has been leaving for the 905 area and beyond since 2016, suggesting that some other fundamental factors are at play. As well, the shift in office space absorptions from the city of Toronto to the 905 area had already begun pre- COVID-19. Growth in industrial space absorptions continues to be found largely in the 905 area, counter to some expectations concerning the growing preferences of online retailers for “last mile” warehousing locations.
The media has reported extensively on the movement of Toronto residents to more spacious suburban locations in the 905 area and beyond, as they search for housing that is more affordable, larger, and more conducive to working from home. Evidence supporting this storyline has been the smaller decline and speedier recovery in MLS residential sales in the 905 area (Durham, York, Peel and Halton) than in Toronto, following the COVID-19 lockdowns – a trend CUR first observed in the July 10th edition of our GTA Housing Pulse.
There is also media speculation that downtown office users are starting to look at satellite offices in the suburbs to give 905-based workers the opportunity to return to the office while avoiding long commutes to downtown Toronto. In contrast, some resurgence in the city of Toronto’s industrial market seems possible, as online retailers establish warehousing operations near denser population centres.
This blog looks at how real estate demand has been spread out across the GTA area over time and asks if the 905 area’s recent strength is a short-term phenomenon related to COVID-19, or if there are more fundamental forces at work. The blog finds the 905 area had seen more growth in both residential and office real estate demand than Toronto even prior to COVID-19.
No question of a shift in GTA MLS sales to the 905 area in the first half of 2020
Figure 1 shows MLS residential sales in the GTA in the first seven months of 2019 and 2020 for both the city of Toronto and the 905 area (data from the Toronto Regional Real Estate Board’s monthly release).