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Residential MLS Average Price of Greater Toronto Area Homes rose by 290 per cent!

Submitted by Jasmina on Sun, 2007-02-04 12:09.

The average price of an existing GTA home rose by a compound interest of 5.6 per cent a year or 290% from $90,203 in 1981 to $351,941 in 2006!

Home ownership has always been more a necessity of life than an investing vehicle, but Real Estate has proven to be one of the most stable long-term investments there is. It is your guarantee of retirement security. It is far better to own your own home than rent, not only for the pride of ownership but because it is your only long-term hedge against inflation. With rental rates increasing constantly, there is no guarantee you will be able to afford them as the years go by.

Real Estate values in major Canadian cities post extraordinary gains, finds Re/Max report that tracks Residential MLS price appreciation in the past 25 years:


Despite all odds, including the tech meltdown, 9/11 and SARS in recent years, the Greater Toronto Area's housing market continues to outperform expectations. Sales in 2006 topped 83,000 units, falling just one per cent short of record-breaking 2005 levels. Average price continued its ascent, settling in at an all-time high of $351,941 (compared to just over $90,200 in 1981), setting overall appreciation for the 25-year period at 290 per cent. A strong economy, job security, consumer confidence and historically low interest rates have fuelled one of the strongest run-ups in recent history. From a demographic standpoint, both baby boomers and generation X continue to express their belief in homeownership by amassing property. Immigration and population growth have also contributed to the health of the residential marketplace. The city continues to expand, pushing farther north, east and west through new housing developments. In the downtown core, high-density residential in the form of condominium apartments has provided a more affordable alternative to single and semidetached housing.

The condominium lifestyle

has finally caught on with various age groups. Young professionals, empty nesters, and retirees have all fuelled extraordinary demand for condominiums in recent years. Unlike the late 1980s, when speculation was rampant and thousands of units were unloaded on an unsuspecting market, today's condominium purchasers are largely end-users. Condominium apartments and townhomes now represent approximately 30 to 35 per cent of the market, and this housing type is expected to capture an even greater piece of the pie as overall housing values increase. After a period of unprecedented appreciation between 1985 and 1989 (the average price almost tripled, rising from $109,000 to $273,000), the market experienced the first devaluation on record, giving back approximately 25 per cent over six years. By 1996, average price had bottomed out at $198,000. Slow but steady growth has occurred since that time, initially sparked by stock market gains translating into material wealth and subsequent economic prosperity. Buyers returned to real estate, albeit cautiously, mindful of the lessons learned in the 1980s.

Hot pocket areas

popular in 1981 continue to enjoy solid returns. In more recent years, areas like the Distillery, Leslieville, Roncesvalles, King St., and Kensington, have joined blue chip favourites such as Leaside, Bloor West Village, High Park, Cedarvale, Forest Hill, Rosedale, Yorkville, Lawrence Park, and John Ross Robertson.

Luxury home sales

have followed in tandem, with sales over the $1 million price point rising 19 per cent this year to close to 1,700 units. Sales over $1.5 million experienced even greater momentum in recent years, rising 24 per cent from last year's levels. Sales over the $1 million price point were virtually unheard of in 1981, with some of the most expensive neighbourhoods commanding between $500,000 and $750,000. With relatively little economic change expected in the coming year, residential sales are expected to remain healthy, slightly off peak levels reported in the last three years. Average price is expected to climb, albeit at a more moderate pace, rising five per cent by year-end 2007.