2020 was different, we can all agree. If you said that in 2019, we would be dealing with a global pandemic the next year, I think many of us would imagine the year’s events to have transpired differently. It’s strange to think that in the midst of this, we shined light on a massive social movement, which culminated in the most polarized election that many of us can remember.
The globe was shaken, and many are still jobless, however the impact in some areas is far from predictable, which many say hints at the economy’s resilience. I never fail to appreciate that if this happened a few years ago, we may have been hit much harder - but, this happened at just the right time to accelerate a movement towards automation across industries that were previously more inert.
This resilience comes in contrast to the financial meltdown in 2008 which erased a massive amount of wealth from the economy - the current economy ‘suppressant’ has funneled the economy into narrower bands, which, as shown in the stock markets as well as the real estate market, indicates that big players are still very confident in humanity’s ability to adapt and move through this.
Even though people were out of jobs, businesses were shut down, and activities were limited, Realtors reported the third highest home sales on record for the GTA, at over 95,000. Let's take a look at the highlights.
Real Estate highlights in the GTA from 2020 include:
- The Toronto Regional Real Estate Board reported 95,151 home sales in the GTA; an increase of 9.4% over 2019 as a whole.
- Year-over-year growth rates for sales was strongest in single-family homes, especially in the regions closest to Toronto.
- Average selling price in December reached $932,222; a year-over-year increase of 11.2% as compared to December 2019. Average selling price for 2020 as a whole was $929,699; an increase of 13.5% as compared to 2019. This growth was driven in large part by the single-family home types in suburban areas of the GTA.
“The Greater Toronto Area housing market followed an unfamiliar path in 2020. Following the steep COVID-induced drop-off in demand during the spring, home sales roared back to record levels throughout the summer and fall. A strong economic rebound in many sectors of the economy, ultra-low borrowing costs and the enhanced use of technology for virtual open houses and showings fuelled and sustained the housing market recovery.” - Lisa Patel, TRREB’s President
Let’s talk about condos in 2020. The biggest effect is seen in areas with a large amount of condos, where a 10% vacancy would make a sizable dent. The 416 area code saw a 4.7% decrease in average condo prices, while the 905 area code saw a 6.3% increase!
Suburban homes around the GTA saw the strongest growth this year, as our previously mentioned exodus continues to drive people from the city towards less dense areas. The numbers are staggering, with Simcoe County and Durham Region seeing a 24% and 22% annual increase in prices, respectively. This means a $500k home in these areas went up by more than $100,000 this year. With 20% down, these folks doubled their money. With 10% down, they had a 300% return.
Moving forward, Canada plans to bring in more than 400,000 immigrants every year, of which typically around 17% arrive in Toronto, equating to around 80,000. Toronto completed around 2,700 homes in Nov 2020 according to CMHC, which extrapolates to just over 30,000 in the year. When you add this inevitable scarcity to the existing landscape, it’s easy to see why a tough situation might only get tougher, stretching our idea of what ‘normal’ looks like.
“While the housing market as a whole recovered strongly in 2020, there was a dichotomy between the single-family market segments and the condominium apartment segment. The supply of single-family homes remained constrained resulting in strong competition between buyers and double-digit price increases. In contrast, growth in condo listings far-outstripped growth in sales. Increased choice for condo buyers ultimately led to more bargaining power and a year-over-year dip in average condo selling prices during the last few months of the year.” - Jason Mercer, TRREB Chief Market Analyst.
At the end of the day, no matter what’s going on, every market shift presents an opportunity, typically for those willing to move against the grain. We all know that we need to “buy low, sell high” - but in reality, buying something ‘low’ means wanting something that others don’t! We should always be doing our best to get a good idea of what things are going to look like, and position ourselves to be better off for it, even if it’s not the direction that we want.
Folks, feel free to reach out to me anytime for a personalized strategy session, I always say that Real Estate has an entry point for every situation, and my specialty is figuring out the plan that works best for you.
Thanks for support in 2020, now let’s show 2021 what we’re made of!
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