Home buyers in the suburbs are about to cash in

To those who bought a home in the suburbs last year because they couldn't afford a property downtown: Start counting your cash.

Home buyers in the Toronto market looking for affordable single detached homes headed to the burbs, resulting in a run-up in prices with property outside the central city appreciating the most in 2009 over 2008, according to a Return on Investment report by ReMax Ontario Atlantic Canada.

As many first-time buyers were lured by low interest rates in 2009, "affordability factored in heavily" with suburbs being the default choice as places to raise young families, according to the report released Thursday.

South Pickering took the title for best price appreciation for detached homes in the Toronto area, according to ReMax.

The average price of a home there increased 9.4 per cent to $358,493.

That's much better than the average 4 per cent increase across Toronto for all types of properties, which includes condominiums and single detached homes.

"Pickering has been great for young families who want a larger detached home under $400,000 and it's right on the border of Toronto," said Jennifer Pearce, a broker with ReMax. "For the same price, you'd be lucky to get a semi in central Toronto."

In second place, the neighbourhoods of Rouge and Malvern saw a 7.3 per cent upswing to $368,095 for the average detached home.

In third place was North Pickering, with prices climbing 7.2 per cent to $396,973.

Port Credit in Mississauga was in fourth spot, up 7 per cent to $614,144.

In fifth place, representing the only central Toronto area, was Riverdale and Leslieville, with prices up 6.7 per cent to $522,017.

Inner-city areas did not experience the same sort of surge in pricing largely because of an absence of move-up buyers.

Weak consumer confidence, particularly during the first half, meant many potential move-up and luxury homebuyers stayed out of the market.

The east side dominated rankings for 2009, with Pickering and Scarborough appealing to families looking for homes under $400,000.

In central Toronto, where average homes range from $572,529 in Don Mills to $1.7 million in Rosedale, property values for detached homes were largely stagnant, up just 1 per cent.

"Upper-end neighbourhoods were slower to rebound once the market regained momentum," ReMax said.

"While sales were up considerably over a year ago and supply was tight in many of the city's hot pocket areas, the expected surge in average price did not occur," said Michael Polzler, executive vice-president of ReMax.

"Buyers remained cautious in their pursuit of home ownership, with most unwilling to overpay for the privilege."

Analysts expect to see little price appreciation for existing homes in the Toronto market this year with a weak jobs market.

Despite that, the housing market was off to a strong start in 2010.

Some buyers are already concerned about a possible interest-rate hike in the second half, as well as the impact of the Harmonized Sales Tax.

"We expect to see a flurry of activity in the first half of 2010 as people try to avoid the impact of the HST and higher interest rates," said Andrew Zsolt, president of Coldwell Banker Terrequity Realty.

The HST, taking effect July 1, will tax some services that are now exempt, such as legal fees and real estate commissions.