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August 2020: Toronto & GTA MLS® home sales: Continued Strength... Generally
Tags: BUNGALOW SALES, TORONTO, GTA, GGH, ONTARIO, PRICES
Toronto, Ontario, September 3rd, 2020 - The Toronto Real Estate Board’s monthly “MarketWatch” statistical report was released this morning showing that the residential real estate market in Toronto and the greater Toronto Area - as represented by sales reported via TRREB’s MLS System - is very strong indeed, though the Condo Apartment sector may be indicating future weakness as inventory for that group appears to be ballooning - particularly in the downtown core. Overall market conditions are in stark contrast to predictions made by Canada Mortgage & Housing head Evan Siddall...at least so far…
While Mr. Siddall went so far as to send a letter
to government officials and leaders of the Canadian mortgage lending industry asking them to stop offering high-risk mortgages to over-leveraged buyers - particularly first time buyers in the face of rapidly rising home prices - because of the potential threat to the bigger economic picture, somme of the major lenders disagreed and predicted a strong market moving forward. What we’re seeing now is an apparently strengthening trend toward “low-rise” homes - meaning, generally, Detached, Semi-Detached and Townhouse homes and a move away from the Condominium market.
In the apparent wake of “Wave one” of the COVID-19 pandemic, several factors are influencing the prevailing strong trends in the residential real estate market, including:
- Many believing they’ll be working from home - either full-time or, at least - moreso than before, thus allowing them to move out of higher-density areas should they choose to.?
- The simple reality that living and working in those more congested areas increases the risk of contracting a virus.?
- A clamp-down on “AirBnB-type” rentals - many of which were Condo Apartments purchased largely [or solely] for this purpose - resulting in smaller-scale “landlords” deciding to unload rather than carry them with reduced revenue streams.?
- A reduction in demand for “AirBnB-type” accommodations as fewer people are travelling.?
- Continued record-low interest rates.?
- A general desire for more space… “distancing” and workspace ...at home, at least partly for the reasons above.?
- Pent-up demand “post wave one”.?
Overall, in a month that’s historically one of the slowest of the year for home sales, total sales volume spiked 40.3% and average sale prices were up 20.1%. Those figures were relatively strong across-the-board, but some incredible strength came from that low-rise sector across TRREB’s market area.
Being focused on Bungalows in “Toronto, The GTA, and Beyond”
, we’re seeing extreme interest in the face of particularly limited inventory. While this style of house has seen increasing demand for some time as the population ages and looks to
downsize - often preferably, without stairs - that trend appears to be strengthening quickly: While Bungalows do tend to cost more per square foot than for example, two-storey homes, they also tend to be a lower price point overall - and also tend to come with larger yards...especially in the older, more established neighbourhoods.
Sales of Detached Homes were up an unbelievable 65.3% in Metro Toronto to 1,099 units averaging a sale price of $1,505,100, up 21.4%. In the balance of the GTA ... “The 905” [area code] ... 4,330 sales of Detached homes were reported, a 47.3% rise, averaging $1,088,559, up 18.5%. All figures herein are year-over-year comparisons unless noted otherwise.
Sales of “Semis” were even stronger, up 81.2% in The Big Smoke averaging $1,166,226. For a Semi-Detached home! Can you say, “unsustainable”? Well, perhaps not as long as interest rates mean money is almost “free”. In the rest of TRREB’s market area sales of Semis were up “just” 60.8% at an average of $784,951.
Condo Apartment sales were still up a relatively strong 9.2% to 1,536 units averaging $673,174, up 8.7% in T.O. and up 14.5% to 750 units averaging $540,491, up 12.9% in the rest of the market area.
Quotable From the Report:
TRREB President Lisa Patel: “Increased demand for ownership housing has been based on improving economic conditions, in terms of monthly GDP growth and job creation, and the continuation of very low borrowing costs. In addition, fewer households have chosen to go on vacation as a result of COVID-19 and instead have remained in the GTA and been active in the housing market, satisfying pent-up demand from the spring.”
TRREB Director of Market Analysis Jason Mercer: “Generally speaking, market conditions remained very tight in the GTA resale market in August. Competition between buyers was especially strong for low-rise home types, leading to robust annual rates of price growth. However, with growth in condominium apartment listings well-outstripping condo sales growth, condo market conditions were comparatively more balanced, which was reflected in a slower pace of price growth in that segment.”
If you can call it a “bright spot” on the “balanced market” front, at least we saw a tiny bit of relief on the inventory front. The all-important Total Active Listings figure was actually up five percent, even in the face of that sales spike, multiple offer situations, and the like. The generally less-indicative “New Listings” figure was up 56.8%.
But “Forward Inventory” - the total number of available listings divided by the month’s sales volume - remained stubbornly low at just over one-and-one-half months. The fly in that ointment also appears to be that much of the inventory is in the form of Condo Apartments, demand for which appears to be waning as noted above, despite the relatively strong sales figures on the month. The “Absorption Rate” - the pace at which the market’s “absorbing” new inventory in the form of sales [Sales divided by New Listings] stood at .583 as of month-end.
Not surprisingly, homes sold “33.3% faster” than last August
at 24 “Property Days on Market” compared to 36.
So...now we see what “Wave Two
Thanks once again for reading... and #StaySafe