Price pressures changing the mix of housing

Markham has served as a high-profile crucible for developers and urban planners toying with higher density new housing.

The results have received mixed reviews, but if the market data is any indication, the demand is there, especially from two emerging groups of buyers not necessarily looking for a single-family home: young professionals and recent immigrants.

The municipality north of Steeles Avenue and east of Highway 404 includes Greater Toronto's first respectable stabs at tract subdivisions in Thornhill, and some of the areas most heinous flirtations with beige cookie-cutter parcelling in Unionville.

To its great credit, the municipality took steps to steer development toward new urbanism principles in the late 1990s by offering quick approvals to projects that met the city's goals of more efficient land use and putting the pedestrian first.

The Cornell community just north of Highway 7 is universally held to be the ideal new urbanist development in Markham, and it has grown steadily over the past decade. A new phase, Cornell Rouge, was launched in November and will be built around a 12-hectare park. Townhouses are starting at $239,990, semis at $284,990 and detached homes at $311,990.

About 400 new homes will be added to the existing stock with Cornell Rouge, which is expected to end up at 10,000 homes when the last nail is hammered. Over a third of those homes will be townhouses, a healthy ratio compared to other mixed product communities.

Not that everything about new urbanism is worth going to the barricades over, but Markham planners knew that the status quo was just not sustainable considering its hemmed-in urban boundaries.

Other York Region municipalities are now reckoning with this revelation, and it ain't pretty.

In February, more housing starts in Markham were multiple products, at 216, than singles, at 200, according to Canada Mortgage and Housing Corp. Richmond Hill and Markham are running close to neck and neck for total starts in York Region for February, at 424 and 416 respectively.

Add to the housing picture some meteoric job growth, particularly in the white-collar industries and in technology research. Highway 404 serves as a virtual silicon freeway as it runs north of Highway 407.

Nearly all of the job growth is at the expense of the City of Toronto, which has lost 29,300 jobs since 2000, according to the city's economic development researchers. They also estimate that more than 7,000 manufacturing jobs are lost every year.

Not as many are going to Mexico or India as some would like to think. Many end up in places like Markham, with property tax rates of between $3 and $5 a square foot for office space, compared to rates that are 2½ times higher in Toronto.

This means a lot of younger homebuyers are trolling around Markham, and higher density homes and suites are more in line with their budgets than single detached homes, which are sliding up significantly like they are throughout York Region.

Not to be discounted in this particular market are recent immigrant buyers, particularly among Chinese, of which there are 91,000 in Markham and neighbouring Richmond Hill. Analysts have noted that owning property is among their first priorities once achieving landed immigrant status.

That's not to say that new single detached home construction is a thing of the past in Markham, but as a new-home market, it's become far more diversified than most would have predicted even five years ago.

The average price of a new single detached home in Markham stood at $385,876 in February, up 15.8 per cent from $333,279 in the same month in 2004, according to CMHC data.

On average, singles are still more affordable than in Richmond Hill to the west, which has always been considered the more affluent of the two communities. The average single price there was $407,068, but it only increased 4.9 per cent from the same month in 2004, which was $388,033.

Another interesting piece of data CMHC released in February was the percentage of single sales in various price ranges. For the first two months of 2005, 70.6 per cent of all new home sales were in the $300,000-to-$399,999 margin, compared to 62.1 per cent for Richmond Hill. In the $400,000-to-$499,999 range, Markham had 19.8 per cent of its total sales in the first two months of the year, compared to 26.3 per cent for Richmond Hill.

The CMHC doesn't monitor new condo, townhouse or semi prices, but resale data from the Toronto Real Estate Board shows Markham led York Region in row and townhouse sales in February with 26 at an average price of $284,496.

Markham also reported the most link sales (multiple suites in the same low- or mid-rise structure) in York Region in February with 29 at an average price of $290,230.

Market facts - Markham