Starter Homes in Southern Ontario

Alyssa Furtado
by Alyssa Furtado April 15, 2013 / No Comments

This two-bedroom, two-bathroom townhouse in Milton features an open concept kitchen and dining room, upgraded flooring throughout, and requires no condo fees.

Our starter home series has taken us across Canada, from the West Coast of British Columbia to Northern Ontario. Because Ontario is so large, with different areas experiencing wildly different markets, we decided to split the province up into three posts. This week, let’s find out what first-time buyers are looking for in Southern Ontario.

In Southern Ontario’s second largest city, Ottawa, the average price of a starter home is $320,000. Compared to what we saw through most of the prairies, this is a drastic increase in pricing, which is why the average profile of a first-time buyer in Ottawa is actually a professional couple.

“The people looking at starter homes here are professional young couples, probably between the ages of 23-27,” explained Brittany Brown, a realtor in Ottawa. “Most of them having decent paying government jobs, but they don’t want to buy condos. Instead, they want to buy something they can get some extra income with.”

So what exactly are young couples getting for $320,000? While a small percentage end up buying a bungalow and renting out the basement, the majority are buying three-bedroom townhouses and renting out spare bedrooms to friends. Unfortunately, many first-time buyers find themselves having to move outside of the city, in order to get into either.

“It’s kind of a strange market right now,” said Brown. “Anything between $250,000 and $350,000 is selling overnight, and with multiple offers.”

The same situation can be found in Milton – a small town on the outskirts of the Greater Toronto Area (GTA).

“If a house is priced well, it’ll sell in a couple of days with one offer, or with potentially 2-3 people going after it,” explained Chuck Charlton, a realtor in Milton.

Considered one of most popular towns for young couples who work in Toronto to live in and commute from, Milton is seeing an average growth of 6,000 new residents per year. Charlton says the average price of a starter home in Milton is about $350,000, but buyers can find a number of options in the $300,000 to $350,000 range.

“At $350,000, you could get an 1,100-1,200 square foot townhouse with 2-3 bedrooms, 1-2 bathrooms, a yard, and a basement you could finish later,” said Charlton. “If a couple can budget for up to $375,000, they can get a couple extra hundred square feet, which often includes a much more open space.”

Aside from the commute into the city, which takes about an hour on the GO Train, one thing Charlton notices of young couples who buy in Milton is the lack of short- and long-term planning.

“What happens here is that people buy their first home and 12-18 months later they start having babies,” explained Charlton. “People need to be prepared, from a mortgage perspective, so they know they can continue to make their monthly mortgage payments while on maternity leave.”

This picture is painted a little differently, as we head down to London, where the average first-time buyer is a young, single female.

Similar to Ottawa and Milton, the average starter home in London is a three-bedroom townhouse. Unlike both cities, however, these homes are priced low enough for one person to make mortgage payments on a single income, and the largest demographic of those doing so are females aged 25-35.

“For $145,000, they can get into a 1,200 square foot townhouse,” said Claire Rolo, a realtor in London. “It’s usually a condo, so they will have to pay condo fees. But, for that price, they can live right in London and be surrounded by lovely amenities.”

Based on what all of the realtors said, we pieced together this chart using real homes listed on MLS.

Starter Homes in Southern Ontario

Obviously, if you have a good job, qualify for the best mortgage rate and can afford to buy, London’s home prices are the most affordable of the three cities. But with an unemployment rate of 10.1 per cent, living and working here may not be the right option for some people.

“Inventory is low right now and market conditions are flat,” said Rolo, “but London is a fantastic city full of university students and working professionals. With home values this low, it’s a great place to buy a starter home.”

If you’re thinking of getting into the market soon, talk to an Ontario mortgage broker today. And if you’re already close to buying a home you should begin looking for a Ontario home inspector and a Ontario real estate lawyer.