This article is the fifth in Motorcycle accident toronto today’ Spring Housing Buzz series, where we will investigate a number of different areas related to the spring real estate market in Ontario. You can read Part 1 here, Part 2 here, Part 3 here and Part 4 here.
The prevalence of remote work exploded at the onset of the COVID-19 pandemic, but as the nation continues moving toward a “return to normal,” more and more employers have begun instituting return-to-office policies.
From a peak of 41.1 per cent of working Canadians working remotely in April 2020, recent Statistics Canada data shows a combined 25 per cent of working Canadians are working either completely remotely or in a hybrid setup.
At the same time, a real estate frenzy that peaked with record sales prices across Ontario in 2022 saw prices fall in 2023 and growth slowing since then, in part due to rate increases from the Bank of Canada.
But many real estate agents say workers who moved away from the city during the height of the pandemic are staying put and stomaching a longer commute a few times a week, while others – especially those farther away from urban centres or in remote or difficult-to-access locations – have said the call back to the office has also called clients back to the city, or that the challenges of rural living caught up with some new owners.
‘Drive until they can afford’
Data from the Toronto Regional Real Estate Board shows the average price of a home in the city of Toronto was $884,385 in January 2020. The average price increased by 40 per cent to $1,243,070 in April 2022 and has since fallen 22 per cent to $959,915 as of January 2024.
While the percentage increase in price may seem large, areas outside of the Greater Toronto Area saw significant increases in the average home sales price – in many cases nearly doubling in two years.
Prices increased in the Hamilton area by about 40 per cent to just under $976,000 from 2020 to 2022, before falling around 10 per cent from record highs last year, according to the Realtors Association of Hamilton-Burlington. Areas farther away from the GTA saw sales prices nearly double.
From his experience, real estate agent Rob Golfi says there are many from the GTA who simply “drive until they can afford.”
Canadian Real Estate Association data shows the price of a home in the Guelph area climbed over 80 per cent between January 2020 and February 2022 to $1.1 million, before falling about 20 per cent from record highs as of January.
Data from the London St. Thomas Association of Realtors shows prices in the region climbed 88 per cent between January 2020 and February 2022, to $825,221. As of February, the average sales price is 25 per cent down from the peak. CREA data shows similar percentage changes to the home sales prices in the Kingston area over that time frame, with prices peaking at just under $750,000 in March 2022.
In Windsor and Essex County, CREA data shows the price of a home roughly doubled between January 2020 and March 2022 to just over $700,000. As of February 2024, the price was down about 17 per cent from the peak price.
According to data from the Barrie and District Association of Realtors, the average sales price of a home in Barrie ballooned by roughly 90 per cent between 2020 and 2022 to just over $1 million before falling about 25 per cent from record highs in 2023.
Shannon Murree, team lead of the MovingSimcoe.com team with RE/Max, Hallmark Chay Realty, said as return-to-office policies multiplied, so did the number of people deciding they no longer wanted to accept the commute.
“Barrie, for example, if you have to go to Toronto and you have to work for 9:00 … if you leave one minute past quarter after 6 or 6:30 – that’s it, you’re done. You’re going to be stuck in traffic,” she said.
“I was just talking to somebody that a normal 45-minute drive took him 2.5 hours to come in.”
‘The office market is currently devastated’
The month after the World Health Organization deemed COVID-19 to be a pandemic, 41.1 per cent of working Canadians were working remotely. As of February 2024, 13.5 per cent of working Canadians aged 15 to 69 worked exclusively from home while 11.4 per cent had a hybrid arrangement, StatCan says.
While difficult to quantify statistically, there’s reason to believe travel restrictions and remote work helped drive people to look at more rural areas in the first few years of this decade.
One real estate agent stated in July 2020 that when northern Ontario regions reopened sooner than Toronto, “they all started coming up here.” Jill Price with Re-Max All Stars, covering a region spanning from the Kawarthas to Bancroft, said at the time that retirees were taking early retirement and moving up north while younger couples in their early 30s working from home were choosing to make their home office next to a lake.
Though the share of remote workers is far from its April 2020 peak, the office environment appears forever changed.
Across Canada, commercial real estate has not recovered from a massive increase in vacancy. Maria Benavente, vice-president and real estate-focused portfolio manager at Dynamic Funds, claims 10 to 15 per cent of demand has been “permanently destroyed.”
Nationally, the downtown office vacancy rate hit a record high of 19.4 per cent to end 2023, according to data from commercial real estate and investment firm CBRE. For context, a “healthy” office vacancy rate would fall between 10 and 12 per cent.
Courtney Elling, intelligent workspace leader for Cisco Canada, said “flexibility is definitely here to stay” and the results of Cisco’s Reimaging Workplace Survey show employees and employers are nearly equally split on work preferences.
Among employers, 24 per cent of those surveyed preferred a mix of home and office, 37 per cent preferred to be mostly in the office and 34 per cent preferred working mainly from home. Among employees, the split was 29 per cent, 34 per cent and 30 per cent, respectively.
Elling said over the last three years she’s seen organizations taking advantage of the fact that they don’t require as much space and perhaps getting out of a lease or selling some space.
“What they’re struggling with (now) is the data. How do I get data to tell me how space really is being used, so that I can make these decisions with a little more support and quantitative data?”
Real estate agent Marcus Plowright said return-to-office policies haven’t had much of an impact on commercial real estate in the London and St. Thomas area.
“The office market is currently devastated. I’ve seen a 25,000-square-foot office footprint reduced to 4,000,” he explained.
“Even if a business wants to get their people back in, they have to accommodate and say, ‘Well, we want you two days or three days out of five,’ and those people can commute and suffer that commute for two or three days.”
Closest to the GTA, Hamilton saw a lot of people settling in the region from Toronto during the height of the pandemic and Golfi says that trend is continuing.
He also hasn’t noticed any big impact from return-to-office policies, echoing Plowright’s sentiments about accepting a few days of commuting. He said nearly a third of the houses currently sold in the Hamilton area are still to buyers from the GTA.
Real estate duo Beth and Ryan Waller in Guelph were at one point fielding calls almost daily from people in the GTA looking to move. Now, however, they said that anecdotally they’re seeing more people leaving Guelph – and not to return to the big city. They had one person move from Guelph to Listowel and another from Guelph all the way to Edmonton.
“People are, in fact, from our perspective, not even moving back to the city, but they’re doing the opposite and going further,” Ryan Waller said.
Real estate broker Matt Lee said Kingston is a great retirement community but during the height of the pandemic, he was “selling homes for older people” who were moving to be closer to their children and grandchildren, “which generally meant they were moving back towards the city.”
At the same time, he said, those doing remote work were moving to where they could “get out of the city and have a little more space.”
Both those shifts appear to be reversing, Lee said, with retirees starting to come back and fewer out-of-town remote workers buying in Kingston.
‘Not everyone’s suited for that’
Areas that saw average home sales prices nearly double between 2020 and 2022 have seen dips since then, typically around a 20 per cent drop from record highs. However, the experience has been a bit more volatile for northern and rural cottages.
In Peterborough and the Kawarthas, for example, the 2023 Re/Max Cottage Trends report showed that through the first quarter of 2023, the average cottage sale price in the region fell by 31 per cent compared with the same period in 2022 — from $1,243,442 to $855,858.
Terry Rees, outgoing executive director of the Federation of Ontario Cottagers Associations, which represents more than 500 lake and cottage associations across Ontario, said rural and northern Ontario had been experiencing “an exodus for 40 years” before people began returning to rural and more northern areas in the last decade as real estate values began accelerating.
People were already looking for more affordable places to live “and maybe a shift in lifestyle” when the pandemic hit and “accelerated that extremely,” he said. Since then, however, what used to be “hot everywhere” is now just hot in pockets.
“Anywhere that’s within two-hour proximity of the big cities, like obviously Toronto and Ottawa or London, (those markets) always tend to be elevated,” he explained.
“It’s also the housing crunch generally that, you know, we talk about people having to drive till they qualify. People have already sort of done the exodus to the city centre, to the near suburbs and then the far suburbs, and then it’s only another leap to get to places that you’re still able to commute.”
But Rees says cottage living is not for everyone, especially in areas where many homes have their own wastewater system, a well or private water system, challenging weather and access conditions.
“There are all things that are the charms of rural and waterfront living, but also make them a unique kind of a place where not everyone’s suited for that.”
In the Barrie area, Murree has also seen some grapple with the reality of living farther away from the infrastructure, amenities and conveniences Toronto offers.
“I’m not saying that’s a bad thing, but if you’ve always been in the city and you’re always just here for your recreational part of it and you’re used to things being a certain way, those definitely are considerations that you have to have.”
However, anyone hoping that prices continue to fall may be in for a shock as a recent Royal LePage report says the recreational real estate market could be in line for a revival with the national median house price forecast to increase by about five per cent.
Low inventory with high demand could prompt a rise in prices, the report notes, with Ontario likely to see the biggest jump nationally, at eight per cent.
— with files from Motorcycle accident toronto today’ Greg Davis, Matthew Bingley, Sean Previl and Craig Lord.