What $165,000 buys: A tool shed in Toronto, an estate in small-town Canada

On a tiny street in eastern Toronto sits a tiny home with a tiny yard, where a small family might find a sliver of paradise. It rests in a tony neighbourhood only a short jaunt north of Lake Ontario and a shorter jaunt from the transit system and downtown.

The 230-square-foot home at 80 Hanson Street has one bedroom, no bathroom and no running water. It was a tool shed before being converted to a home away from home. In short, the property is small.

And while it may not be an ideal home for everyone, this tiny home just sold to a new owner. In Toronto’s continually-hot housing market, everything sells eventually.

Detractions aside, the home is cozy. It has air conditioning, which will help when the effects of claustrophobia kick in. But the real perk is the price. At a cost of $165,000, it may be the cheapest home to sell in Toronto in over a decade.

Once upon a time, paying $165,000 for a home in Toronto may have been the norm. Today, a home buyer is far more likely to face $1.65 million price tags. The Canadian Real Estate Association reports that the average price of a Toronto home was $503,094 last month.

And that wasn’t even the highest in the country. Vancouver’s average home price was $784,567 in August. Homebuyers in Calgary and Montreal face a similarly hot market, and prices not that far off Toronto and Vancouver.

For residents of Canada’s largest cities, the idea of a $165,000 home may seem too good to be true. For Canadians living elsewhere, the idea of paying six digits for a former tool shed without running water likely boggles the mind.

A quick perusal of homes for sale in Canada finds countless modern, expansive homes in small towns across the country below the $200,000 mark.

This 780-square-foot bungalow in Steinbach, Man., has three bedrooms, a finished basement, a golf course-sized lawn and, yes, running water. It is selling for $168,900.

A two-storey home in downtown North Bay, Ont., will cost you $152,000. It comes with a driveway and garage, gleaming hardwood floors throughout and additional space in a finished attic. And it is right in the city’s downtown core. It’s just that the city has a population of 50,000.

Such is the state of Canadian real estate. A mansion in a small town sells for the same price as a tool shed in Toronto.

The greatest challenge facing Canada’s smaller communities comes down to supply and demand. According to Statistics Canada, rural Canada is facing a more severe population drain to larger urban centres than ever before.

That leaves some communities taking extraordinary measures to retain and grown their population. In Saskatchewan, a graduate retention program offers post-secondary degree holders $20,000 to move or stay is the vast prairie province. In Mundare, Alta., the government is selling plots of downtown property for $1 to lure new business.

But perhaps the best example is found in the Municipality of Pipestone, Man., where land is practically being given away in a bid to boost the region’s population. An ongoing project offers to sell new residents plots of land for $10. The only caveat is the recipient must build a home and move in.

Officials have previously declared the strategy a success. And despite, or perhaps because of, the high price of real estate in the city, small-town Canada is showing signs of life.

According to Statistics Canada, the strongest real estate price growth is actually coming from outside the country's largest urban centres. Residential properties in Canada's 33 major census metropolitan areas held a value of $2.7 billion in 2011, for an increase of 54.4 per cent since 2006. Outside those major centres, the value growth from 2006 to 2011 reached 60.9 per cent.

Don Campbell, senior analyst with the Real Estate Investment Network, says there is some truth to that apparent trend. As cities continue to get more expensive, homebuyers are increasingly looking to more affordable satellite communities or small towns.

“The apparent move towards smaller communities outside of Canada’s major cities is an important trend, but one that is often mis-interpreted as a population/lifestyle choice, when in fact it is more of an affordability and demographic combination,” Campbell says.

“As the larger (census metropolitan areas) continue on their upward path of value increases, they become increasingly less affordable for the next wave of home buyers,” he adds. “This trend is driving the demand for condo living in many of the CMAs - even including smaller ones such as Calgary and Edmonton - but as this buying group proceeds through their life cycle, children come into the mix and the inevitable requirement for more space and more family friendly venues.”

Campbell adds that big-city dwellers are trending toward smaller, more affordable units. Not converted tool sheds, but apartments and condominiums. Meantime, bargains continue to be found small-town Canada.

A Toronto tool shed or an estate in small town Canada: The choice is yours.