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A screen grab for a listing of a home that recently sold for $560,000 less than the purchase price in 2022.<\/p>\n
Realtor.ca<\/p>\n
The boom and bust of the Toronto regional real estate market has had devastating consequences for some buyers, who purchased new homes in fledgling subdivisions that sprawled into farmer\u2019s fields in suburban communities like Milton.<\/p>\n
The drop in values, along with rising interest rates, has increased the strain on residents. It\u2019s contributed to a spike in food bank use and left owners building basement apartments as they struggle to hold on to their homes.\u00a0<\/p>\n
Unlike in downtown Toronto, where condos built during the boom were often tiny and marketed mostly to investors, these newly-built houses\u00a0offer plenty of space, and many buyers intended to live in them.<\/p>\n
But they have become another casualty of a real estate downturn that has rippled far beyond Toronto condo towers, and is now reaching places like Georgetown and Brantford.<\/p>\n
A heavily mortgaged town<\/p>\n
The five-bedroom home was originally\u00a0built in 2019 by developer Country Homes in the town\u00a0of Milton,\u00a0north of Oakville. It includes parking for up to six vehicles, a main floor in-law suite that\u2019s attractive for multi-generational living, and backs on to a pond,\u00a0according to the listing<\/a>.<\/p>\n The original owners bought it for $1.085 million, according to property documents. It was a preconstruction sale, which probably took place around 2017, said Gupta.<\/p>\n The listing agent says the homeowners, who downsized in part to have a lower mortgage, weathered the loss and are happy in their smaller home.<\/p>\n realtor.ca<\/p>\n Soon after that, prices, which had been climbing since 1996, recovered from a small blip and entered a period of\u00a0wild growth<\/a>.\u00a0When Gupta\u2019s clients bought the home in 2022, the original owners had more than doubled their money.<\/p>\n Milton saw intense development of new neighbourhoods over that period, putting strain on resources like schools. There are subdivisions so recently built there\u2019s\u00a0even an avenue<\/a>\u00a0named after the current mayor.<\/p>\n It\u2019s a young community, with an average age of just 35, according to\u00a0Statistics Canada<\/a>, and it\u2019s a heavily mortgaged one. Almost 80 per cent of Milton homeowner households hold a mortgage, the\u00a0highest percentage in the country<\/a>, according to\u00a0StatCan numbers analyzed by Andy Yan, the director of the city program at Simon Fraser University, in 2023.\u00a0<\/p>\n In February 2022, average home prices were up 32 per cent in Milton compared to the previous February, according to historical numbers from the\u00a0Toronto Regional Real Estate Board<\/a>.<\/p>\n But there was a long way to fall.<\/p>\n Not a condo but still a crash<\/p>\n Following the 2022 peak, as interest rates rose from pandemic-era\u00a0historic lows and prices began to tumble, growth in Milton has slowed, said local councillor Colin Best.<\/p>\n In Milton, the average price for all homes dropped about 28 per cent over the same period,\u00a0according to sales data from the Toronto Regional Real Estate Board\u00a0<\/a>(which doesn\u2019t include preconstruction sales).\u00a0<\/p>\n Other 905 communities have seen similar drops: 25 per cent in Oakville, 32 per cent in Whitby, 35 per cent in Oshawa, and 27 per cent in Halton Hills (home to Georgetown and Acton).\u00a0<\/p>\n \u201cAnybody that bought two to three years ago is caught in a bind, especially if they\u2019re renewing their mortgage, because the property\u2019s now worth less,\u201d\u00a0Best said.<\/p>\n Jonathan Zadegan,\u00a0managing partner and sales representative at The Zadegan Group,\u00a0said that newly built homes can have some of the same appraisal problems as condos.<\/p>\n When buyers agreed to buy the homes\u00a0years ago, the prices were higher, and now that they\u2019ve dropped, it\u2019s difficult to get a mortgage as the properties\u00a0are valued at a lower price.<\/p>\n <\/p>\n
Pickering condo prices have crashed by 57 per cent since February 2022. Vaughan, Markham and Milton have also seen worse losses than the city of <\/p>\n <\/p>\n
Pickering condo prices have crashed by 57 per cent since February 2022. Vaughan, Markham and Milton have also seen worse losses than the city of <\/p>\n The upside is that it takes less time to build new homes than tall condo towers, so there was less time\u00a0between presales and when the owners took possession for prices to fall, he said. As well, because they are not as dense, there\u2019s not a glut of units coming onto the market that were started in better days.<\/p>\n Investors bought some of these homes. Some are now on the assignment market, where contracts to buy homes before they were built are resold, a phenomenon that was characteristic of the condo market,\u00a0Zadegan added.\u00a0<\/p>\n But most people intended to live in their homes once they were built. Many of these homes were marketed towards these people, known as \u201cend users\u201d in real estate jargon.\u00a0<\/p>\n And they are struggling to hold on however they can.<\/p>\n Food banks see uptick in use<\/p>\n Milton is\u00a0starting to see power of sales, forced sales by a lender when a borrower defaults on a loan, Best said.\u00a0<\/p>\n Some homeowners, he said, are \u201cputting in basement apartments even before they complete the house,\u201d he said, looking to these units to help pay the bills.<\/p>\n While there are still \u201cextremes\u201d and people \u201cbuilding monster homes,\u201d Best added, the downturn has hit some in the community hard.\u00a0<\/p>\n More Milton households are using food banks or putting in basement suites to try to hold onto their homes.<\/p>\n Lance McMillan\/Toronto Star<\/p>\n \u201cAs mortgage costs and overall financial pressure increased, many people found it difficult to manage their expenses,\u201d said Irshad Ahmad of the Milton Halal Food Bank, in an email. This has contributed to spike in people turning to the food bank for help.<\/p>\n \u201cThere has been a noticeable shift. Individuals who once supported\u00a0food\u00a0banks are now seeking assistance themselves, which reflects how significantly circumstances have changed,\u201d he said, adding that some individuals have faced bankruptcy due to the decline in home prices.<\/p>\n<\/p>\n
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