Where affordability trumps other factors
By Derek Raymaker - Globe and Mail
The eastern suburbs of Durham Region have never suffered from being too much in demand.
From their birth in the post-Second World War period right up until the present day, these areas have been viewed as second choices in terms of location by new-home buyers. That reputation has been reinforced by the drawbacks of congested highway connections and unfortunate landmarks such as the two nuclear generating stations. The areas also largely lacked any sense of history. Even Brampton, Mississauga and Oakville have historic town centres.
Because of this, the main urban municipalities of Durham Region - Ajax, Whitby, Oshawa and Pickering - have held a distinct advantage over the rest of Greater Toronto when it comes to affordability.
Until very recently, Durham Region was by far the most affordable market for new single-family, detached housing in Greater Toronto. It also had a fairly large stock of land for new residential housing to keep the volume of new housing steady and builder’s land costs low.
Durham Region is still relatively affordable when it comes to new detached housing in the rest of Greater Toronto, but prices have spiked significantly since 2004, when the provincial government implemented legislation restricting municipalities from expanding their urban boundaries. Along with its effort to create a Southern Ontario greenbelt, the province significantly limited the perceived supply of residential land almost overnight.
Besides a sudden price hike in new detached housing, the realities of the province’s move to steer the 905 suburbs toward development intensification also resulted in a sudden interest in townhouse and condominium development in Durham Region, of all places.
Some builders have been making the most of it by launching condo projects aimed at older buyers from the area. San Francisco by the Bay, a two-tower project on Pickering’s lakefront released earlier this year by Chestnut Hill Homes, has done well in what is a very underdeveloped condo market. That won’t change the fact that the new-housing market is largely driven by young families making their first or second purchase, and, with all else being equal, a new detached home is what they desire most.
Oshawa and Whitby remain the most affordable markets for buyers seeking single-family, detached homes. In the first 10 months of 2007, the average prices of newly sold detached houses were $310,511 and $343,486, respectively, well below the Durham Region average of $366,440 for such residences, according to Canada Mortgage and Housing Corp.
On the other side of the affordability scale is Ajax and Pickering, with average prices for single detached houses of $436,865 and $476,005, respectively, for the January-to-October period of 2007.
Ajax reported the largest increase - 20.6% from $362,330 - from the same period last year. Not surprisingly, Ajax also registered the biggest drop in starts for detached houses from January to October - 62% to 404 from 1,059 in the year-earlier period.
Pickering had the next largest price increase for single-family, detached housing, up 8.3% from $439,388 in the first 10 months of 2006, while price increases remained under 3% in Oshawa and Whitby.
Pickering has emerged as one of the most interesting submarkets in Durham. Its close proximity to Toronto along with protected natural areas in its northern reaches have pushed housing there into a higher price range.
One new project that appears to define that newfound affluence is the Ravines of Buckingham Gate, launched last May by Glen Rouge Homes, just south of the Seaton Golf and Country Club at Brock and Rossland roads.
Prices at Buckingham Gate range from $533,000 to $745,000 for between 1,659 and 4,170 square feet of living space. It should be noted that these homes are on large 48-, 50- and 60-foot-wide lots, with many homes backing on to conservation land.
While the price point here is a cut above the Pickering average, houses of this size - with features such as direct access to conservation land, granite countertops, walk-in pantries and oak staircases - would be significantly more expensive in most other submarkets, even in the 905 suburbs.
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