Toronto, Ontario, December 3rd, 2020 - The Toronto Region Real Estate Board's monthly statistical update, “MarketWatch”, was released this morning by Board President Lisa Patel showing residential MLS® market activity for November, 2020 continued the primary trend of recent months - namely high demand and low inventory for “low-rise” - or what the Report refers to as “ground oriented” - homes, but waning demand combined with increasing inventory for the Condo Apartment sector, particularly in Metro Toronto.
Most market observers agree that the COVID-19 pandemic has significantly shifted demand for housing away from more congested areas. For similar reasons, buyers are re-thinking living in Condo Apartments with their inherent elevators and common areas. Rather, people want more space inside to accommodate working from home in many instances as well as more space outside. Further, if they’re not required to travel into the downtown core areas - either less often than they used to or, in some cases, not at all - they’re more willing to look further afield which, as one Broker put it, is driving “bubble-like conditions” in the ‘burbs.
Other market watchers preach caution: An end to the pandemic brought about by potentially successful vaccination campaigns could mean a return to downtown desks will be required in the not-to-distant future. That’s not likely an across-the-board bottom line, however: Many employers have already stated that at least some portions of their workforces will likely continue to work from home at least part of the time. The employees appear to love that idea, generally. And the employers like the cut in overhead resulting from lower bricks and mortar space requirements.
So, with prices strong and still rising - not to mention houses selling extremely quickly on average - it’s a great time to sell if that’s on your radar.
As for the buyer side, you may well find yourself in a “bidding war” due to an extreme supply / demand dynamic in the case of houses. The best strategy is to have your financial “ducks” lined up with a mortgage pre-approval in hand. Even something as simple as a home inspection condition in your Agreement of Purchase and Sale can drop your bid from top spot to the bottom of the seller’s list. (A good listing agent will do their best to have the seller obtain a home “pre-inspection” prior to listing their home in order to allay buyers’ fears about leaving out that inspection condition. A pre-inspection available for buyers’ perusal can also encourage more offers, for obvious reasons. Just ensure that it’s performed by a reputable, well-known inspector or firm.)
Buyers also continue to benefit from rock-bottom mortgage rates. Consider paying a little more in interest, though: As we - hopefully sooner rather than later - revert to some kind of "normal", interest rates may well begin to rise. Keep an eye on the bond yields.
Competition amongst buyers of single-family homes continued to support double-digit year-over-year rates of price growth in many Toronto & GTA neighbourhoods.
Overall - meaning all home types and all TRREB market areas - November’s 8,766 MLS® sales represented an increase of 24.3% at an average selling price of $955,615 compared to one year earlier. Again, the bulk of that is in the “house” group as opposed to the “apartment” group.
In Metro T.O., 933 Detached sales was a 19.3% jump at an average selling price of $1,477,226, up 8.7%. But Toronto Condo Apartment sales totalled 1,375 on the month, up just eight tenths of a percent, averaging $640,208, down an even three percent.
In the balance of the GTA - “The 905” (area code) - 3,289 Detached houses sold, a 33.6% spike, at an average sell price of $1,124,286, up 19.2%. Condo Apartment sales in that broader area fared considerably better - comparatively - at 657 units sold, up 23.3%, averaging $533,984, up 4.8%. Better performance than Toronto Condos, but still well behind the numbers for the “ground-oriented” (I’m liking that term… it implies actual “dirt & backyards” as opposed to “elevators & balconies”.)
The April, 2017 selling price “peak” was $1,578,542 for Detached homes in Toronto, just for the record. In the balance of the Greater Toronto Area, that peak actually came the prior month at $1,124,088 which means November’s figure for the latter represents a new record, unofficially. It should also be noted that that average had dropped to $907,843 in April of this year at the height of the pandemic…”Wave One”, at least. That’s a rise of nearly 24% in seven months. Think that can last? No way. Not that we will or won’t top it; just that it’s clearly unsustainable. Toronto’s “pandemic bottom” for Detached home sale prices was also hit in April at $1,249,730 which means they’re up “only” 18.2% over that same 7 months.
Condo Prices in Toronto actually peaked in the first quarter of this year and have fallen around 9% on average since that time.
Bungalows throughout Toronto and The Greater Toronto Area continue to be in short supply for a variety of reasons, not the least of which are our aging population and a simple lack of new construction. Demand remains robust across the market area (and other markets, no doubt) as the one-storey option is also attractive to younger buyers, simply because of the lower average price point - even if this simpler style of home has fewer square feet of floor space on average. It still offers a more attractive “entry point” for the younger buyer, not to mention the fact that many of these cozy homes are particularly adaptable for “in-law suites”. The lot area tends to be greater as well which means more back yard - and more frontage - which also makes Bungalows attractive to the “reno & flip” and “total-rebuild” market sectors.
Well, in a nutshell, it’s “Condo inventory up; Freehold inventory still very tight” - as already noted. Overall, Total Active Listings (TAL) stood at 13,798 as of month-end which represents a 15.4% increase. All figures quoted herein are Year-over-Year comparisons unless specifically noted otherwise.
“Forward Inventory” - TAL divided by the month’s total sales - stood at a paltry (by historical standards) 1.57 months...and, again: That’s skewed by rising Condo Apartment inventory. Specific numbers for each sector weren’t available at the time of writing.
Lisa Patel, TRREB President: “Competition between buyers of single-family homes, and particularly detached houses, remained strong last month and continued to support double-digit annual rates of price growth in many GTA (neighbourhoods). In contrast, condo buyers have benefitted from much more choice compared to last year. Pre-COVID polling had already pointed to an increase in investor selling in 2020. The pandemic only added to this trend with a stall in economic growth and a halt to tourism impacting cashflows for many investors.”
Jason Mercer, TRREB’s Director of Market Analysis: “Year-to-date home sales through October were above last year’s level. The economic recovery in some sectors coupled with low borrowing costs has kept home purchases top-of-mind for many GTA residents. With this being said, we have not accounted for all of the pent-up demand that resulted from the spring downturn. Expect record or near-record home sales for the remainder of 2020.”
It’s no surprise that the average home sold “20.8% faster” this November at 19 days versus 24 “Listing Days on Market”.
We’d like to take this opportunity to wish you and yours who celebrate it the Happiest of Holidays…and an outstanding, less “intense” 2021…
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