If Canada’s youth want to own a standalone house with a back yard, they better start looking for work in small towns and rural areas — or get ready to move to distant suburbs.
Canada’s urban markets are seeing a growing price spread between condos and low-rise homes, as the supply of single-family dwellings continues to stagnate, while condos continue to go up.
In Toronto, that price difference hit a record high this past summer. According to data from a recent Royal LePage report that was flagged by BuzzBuzzHome, the average two-story house in Toronto costs $322,533 more than an average condo. As recently as 2010, that difference was only $245,531.
“Eight years ago you could have bought both a low-rise and high-rise property [in Toronto] for the price of the former today,” BMO economist Sal Guatieri said in a recent client note.
But that’s nothing compared to Vancouver, where the house-condo gap has grown to a whopping $652,750. That’s up from a $488,000 gap three years ago.
Story continues below slideshow
For the middle class in these cities, low-rise homes are quickly becoming an unaffordable dream. Moving to more remote suburbs, or moving into condos, are becoming the only reasonable options. A two-story home in Toronto now costs $678,000 on average, while in Vancouver the average price is now at $1.1 million.
Nationally, the average two-story house costs $418,000, RBC reported — still affordable for the middle class, at least for now, while interest rates remain at very low levels. An average condo will run you $246,000, a price gap of $172,000.
BMO’s Guatieri says a lack of available land for development has “driven detached home prices higher, while smaller unit sizes have dampened condo demand.”
He expects the growing “premium” on owning a detached house will push more people into the condo market, “thereby stemming the upward pressure on detached home prices.”