Toronto’s Housing Boom Refills Empty Nests, Driving Prices Even Higher
OAKVILLE, Ontario — Janet Barber doesn’t dwell too much on the view from her driveway.
Many of her longtime neighbors up and down the block have cashed in on the area’s soaring house prices and moved away. Where their modest wood homes once stood, much larger architect-designed houses of stone, steel and glass fill the lots. Across the street, a big sign plastered with “Sold” stickers means that one is probably next to go.
But no matter how much Ms. Barber and her husband, Michael, might now be able to get for their own three-bedroom bungalow, they are not about to join the rush.
Why? Though they are old enough to be empty-nesters, their nest isn’t empty. Their 29-year-old daughter, Sarah, has been living with them since she finished a graduate degree in 2013, because she can not yet afford a place of her own. Her older sister, Jennifer, did the same for six years.
The more house prices rise, the longer it will take Sarah to save up enough to move out. But the longer she and thousands like her stay with their parents, the fewer houses are put up for sale — and that scarcity is a big reason prices are soaring.
It is a paradox of the red-hot real estate market around Toronto: Some owners are not selling because prices are too high.
Oakville, the affluent commuter town where the Barbers live, has been transformed by the property boom in the Toronto area. Last month, the average sale price in Oakville hit 1.4 million Canadian dollars ($1 million), 30 percent higher than a year ago. Prices are climbing into seven figures across the region, and rentals are expensive and difficult to find.
Those daunting figures have driven thousands of young adults back into their childhood bedrooms. An unusually high 56.5 percent of people in their 20s in the Toronto area still live with their parents, compared with 42 percent nationwide. Like Sarah Barber, many of them appear to be trading some independence for the chance to turn what otherwise would have been rent money into savings for a down payment.
It can make sense financially for them, but it also makes the affordability problem worse. Basic economics says that high prices ought to entice more owners to sell, with the added supply helping to relieve some of the upward pressure. But that is not happening in Toronto, where, despite intense demand, the rate of new listings has been stagnant for several years, and even fell 12 percent last month.
There may be several reasons more Toronto-area homeowners are not doing what the economics textbooks predict. Some analysts believe that parents who might otherwise sell, but are staying put to accommodate their adult children, are a significant factor.
“It’s the only gift we can give them,” Janet Barber said as her daughters tried to persuade the family’s golden retriever puppy not to lick every face in the living room. “We can’t give them a 200,000-dollar down payment on a house. So what can we do? We can house them.”
Prices are stable or rising slowly in most other Canadian cities, but Toronto is booming, fueled by rapid population growth, and builders cannot hope to meet all the demand. A similar frenzy took hold in Vancouver, British Columbia, for a while, but a series of measures, including a tax on foreign buyers, seems to have cooled it off for now.
Dana Senagama, the principal market analyst for the Toronto area at the Canada Housing and Mortgage Corporation, a federal agency, said experts were just as taken aback by the price explosion as the general public.
联邦机构加拿大按揭及房屋公司(Canada Housing and Mortgage Corporation)多伦多地区首席市场分析师达娜·塞纳伽马(Dana Senagama)说，专业人士像普通民众一样，对价格的爆炸式增长感到惊诧。
“I think it’s crazy,” Ms. Senagama said. “We all, as an industry, just need to be careful and make sure we’re not getting in over our heads.”
She said low interest rates, Toronto’s status as the top destination for affluent immigrants and foreign investment in Canadian property all played a role in heating up the market. But so does the relative reluctance of homeowners to list their houses in a city where existing homes account for 80 percent of sales.
Murtaza Haider, a professor of real estate management at Ryerson University in Toronto who specializes in data analysis, said the large number of adults still living with parents was an important factor. In parts of the area, the rate is as high as 78 percent, according to Statistics Canada, the federal census agency.
多伦多霍林斯大学(Hollins University)致力于数据分析的房地产管理教授穆尔塔扎·海德(Murtaza Haider)说，一个重要因素是大量成年人仍与父母同住。根据联邦普查机构加拿大统计局(Statistics Canada)的数据，在多伦多部分地区，这一比例高达78％。
Some of that comes from social traditions among certain immigrant groups, but Professor Haider and others say the trend is driven more by high house prices and an increasingly unstable job market for young adults.
“There’s been a big demographic shift,” Professor Haider said. “The logical system of housing tenure, which has served us well, has been seriously impacted.”