The heat from Canada’s two most fiery real estate markets is spreading out to the regions that lie around them. Victoria, Hamilton/Burlington, Barrie and other communities in the orbits of the blazing hot stars are seeing double-digit price gains in their housing markets in a “spillover effect,” the result of buyers moving farther afield in search of affordable single-family homes, real estate firm RE/MAX said today. The average price of a Vancouver home rose 24% compared to one year ago, with singles in the city now costing more than $2 million. In Toronto, the price gain was 14%, while the average home price in the GTA was $675,492. For a single detached home in the city of Toronto the average price is above $1.1 million.

The “ripple effect” Toronto and Vancouver are having on markets outside their boundaries is “quite significant,” a RE/MAX spokesman said in a statement. So significant that even with the two major markets removed from the calculation, the national average house price still rose about 10% in the last year.

In its Spring Market Trends Report, RE/MAX notes that one of the effects of the stiff competition in Toronto and Vancouver’s housing markets is that many sellers are reluctant to list their homes. On the one hand, they know they can make a quick sale for a high price; on the other hand, they don’t want to become buyers in such a competitive market. Others are just waiting until prices go even higher before selling.

The most significant change in the luxury market is the increased demand for high-end condos. This demand is driven by downsizers looking to shift to a more downtown lifestyle with easy access to dining and amenities. There is a shortage of supply in the high-end condo market, and new developments have sold out quickly.

The most active segment in the Toronto market, the report says, is move-up buyers looking for something bigger than what they now have. Detached homes are the most sought after property types in the GTA, with singles in the 416 area going for up to $1.5 million.

There is also strong demand for condos, mainly from first-time buyers and downsizers for whom single-family homes are out of reach, says RE/MAX. The highest demand is for condos with good access to transit, and developers are adding more two- and three-bedroom units to accommodate families.

At the high end of the market, the RE/MAX report says, the most significant change is an increased demand for luxury condos, driven by downsizers shifting to a downtown lifestyle with easy access to dining and amenities. Because of a shortage of high-end condos, new developments sell out quickly.

As for those Toronto-area first-time buyers who won’t give up the idea of a single-family home, many are going to places like Brampton, Whitby and Barrie, notwithstanding the longer commute times. Prices in these communities have risen 16%, 13% and 14% respectively. In Barrie, home sales were up an impressive 27% in the first quarter of 2016 compared to a year ago. Most of this activity is the result of the “commuter population” moving there from Toronto.

The photo at the top of the page is of a powder room (model suite) at Tridel’s Sherwood at Huntington condominiums, now under construction. Luxury Sherwood Collection condos are priced up to $2.9 million.

Spillover Effect Lifting Home Prices Outside Toronto & Vancouver by Josephine Nolan | Condo.ca