GTA Housing Market Pulse

Bubble Trouble in Ontario? A Comparison of Home Price Gagins Now and During the Mid-1980s Cycle in Ontario

July 14, 2021 - The Bank of Canada categorizes the Greater Toronto and Hamilton Area (GTHA) housing market as “exuberant”. CMHC flags the market as having “rising vulnerabilities”.

This Housing Pulse issue tests these views by analyzing how the recent performance of the MLS average sales price in the Greater Toronto Area (GTA) compares to the 1985-1990 housing cycle, the last time the market experienced a price bubble. We also explore how prices in other parts of the Greater Golden Horseshoe (GGH) behaved in both periods.

We conclude that the upside in the 1980s housing bubble was hotter than the current cycle, but the root causes are the same – favourable interest rates and demographic shifts, combined with too little housing supply. This cycle, land-use regulations constraining the development of ground-related housing in the 905 regions, has contributed to more households moving outside of the GTA, as evidenced by average prices rising faster in the outer regions of the GGH than in the GTA, to an even greater extent than occurred between 1985-1990. 

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