Real estate keeps rising and rising, my friends! Our first steps into 2021 show no break in our upward trend, as GTA Realtors reported almost 7,000 sales, up more than 50% from January 2020, showing that the pandemic has truly created a more urgent demand for housing.
Here’s what happened last month in the GTA:
- The Toronto Regional Real Estate Board reported 6,928 home sales in the GTA; an increase of over 50% compared to January 2020. This included steady growth across all property type segments.
- Price growth was driven by the low-rise market segments, while the average condo apartment price was down in Toronto. However, if we continue to see condo sales growth outstrip condo listings growth, we could start to see renewed growth in condo prices later this year.
- Average selling price in January reached $967,885; a year-over-year increase of 15.5% as compared to January 2020. The MLS® HPI Composite Benchmark was up by 11.9 per cent over the same period.
“The pandemic certainly resulted in an unprecedented year for real estate in 2020, but it hasn’t put a damper on the overall demand. Looking ahead, a strengthening economy and renewed GTA population growth following widespread vaccinations will support the continued demand for both ownership and rental housing. But over the long run, the supply of listings will remain an issue, particularly in low-rise segments.” - Jason Mercer, TRREB Chief Market Analyst
The data indicates that the HPI benchmark price for Toronto condominiums has stayed quite constant, even increasing incrementally year over year, compared to the usual uptick of around 10%. However, the average sale price, which only reports the data of the homes actively selling, indicates a drop of 4.7%. Since the benchmark price has stayed roughly constant, but average sale price has dropped, this suggests that there hasn’t necessarily been a drop in condo value, but that sales are trending towards the lower end of the typical range.
This trend is likely being realized due to the overarching effect of this pandemic on property values; part-time and non-essential workers that make up a large proportion of the rental market, are currently out of work. As the one-bedroom condos are less likely to be occupied by a family with stable income, and more likely to be investment properties occupied by tenants, this makes their expected rental income more susceptible to market fluctuations. As the rental income drops, and landlords aren’t able to carry their mortgages, they try to sell. When more units hit the market, the price drops. And when demand drops, price drops even more.
Another key factor to consider in all of this is that Canadian Mortgage professionals have reported that the mortgage deferral “Cliff”, or the point of time after the initial mortgage deferral announcement when a large number of deferrals were expected to come due, has had most of its constituents resume their regular payment schedule, as the vast majority of deferrals were taken out of abundance of caution, rather than necessity. As jobs continue to recover, the population continues to become vaccinated, cases continue to decline, and immigration begins to resume towards its 400,000 annual mark, we’ll be expecting the bullish trend to continue.
Is now the time to buy? It might depend on what your desired areas and budget are. Is now the time to sell? YES. Think you’re ready to start looking? Download our Ultimate Guide to Buying your Dream Home here and check out our home search function below!
What should you do if you’re thinking about buying or selling? Consider the above information and give Zubin, Mansoor or Karl a call. Market conditions are changing quickly, but we have you covered. Let us make a plan that works for you based on price, location and timelines. We know our market and we’re here to help.
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