Pat yourself on the back. You made it to 2021. Happy New Year!
If you haven't seen the movie Groundhog Day with Bill Murray don't worry because your probably living it. In 2020, as lockdowns seemingly came and went and came again one thing remained. The Real Estate Market in Toronto and the GTA remained HOT! Maybe not always the same heat but generally HOT! Even with a pandemic, 2020 was no exception. In December alone sales were up 64.5%. Low inventory and historically ultra low interest rates (under 2%) helped drive a lot of the price growth throughout the GTA. The contrast within the market also loomed large.
While detached home buyers faced a challenging buying process with multiple offers and a lot of competition, the condo market in most of 2020 offered more inventory and less competition that has been seen in years. While condo investors faced some tenant challenges and rental price reductions, first time buyers and end users in the condo market in general had more choice then ever before. From a buyers perspective, 2020 was, and continues to be, the best time to buy a condo in years. In the near term this is likely to continue into the spring & summer of 2021.
Some Highlights from 2020:
- The number of sales reported through the Toronto Real Estate Board were were up 8.4% compared to 2019. This included a record result for the month of December, with, 7180 sales in December alone. This was a year over year increase of 64.5%
- Year over year sales growth was strongest in areas around Toronto. Particularly in single family detached homes. As people re evaluated their home/work space, communities like Oakville, Burlington, York, Mississauga and beyond saw 50%+ more sales over 2019.
- The average selling price of all home types in the GTA reached a new record of $929,699 which was up by 13.5% compared to 2019. The average detached home in the 416 increased to $1,475,758 and in the 905 $1,175,753.
2020 also saw numerous new trends and patterns emerge throughout the market. Working from home, movement from condos to detached homes, lower average rental rates in the condo market & record detached home price growth in the 905, 416 & 705.
Working From Home
The working from home trend has had profound implications for people and the choices they are making when choosing homes and where they live. For many, being downtown has become less important in comparison to having more space at home to work and live. Even if that means moving out of the the city core. This has had a huge impact on the condominium rental market which saw 10% + reductions in rental rates in some areas. It has also driven up purchase prices in some of the areas outside the city (22%+ in average prices for detached homes in 905) largely due to people re-evaluating their space requirements. Although it is still early in 2021, eventually many employers will expect employees to return to their office space when the restrictions relax. However, there will also be many employers who embrace their employees working from home long term. Less space required means less cost for rent etc. Shared office space was a growing segment in the commercial market prior to 2020 and is expected to become more popular in 2021 and into the future. For many people, The commute into an office everyday of the week may be a thing of the past giving way to more shared space within an office environment that offers flexibility of a work from home and office environment on a less regular basis. This undoubtedly has and will continue drive people to look for more space at home that offers office space and more indoor and outdoor space to allow for more time living while also working from home. Price and sales growth outside the city has proven this trend might continue.
Movement In the Condo Market
While the housing market bounced back strongly in 2020 there was a dichotomy between the single-family (detached, town and semi detached) market and the condo apartment market. Low supply of single family homes continued to drive competition and prices up, while new condo listings far-outstripped growth in sales. The result? More listings meant more choices for buyers which ultimately let to more bargaining power and a dip in year over year condo prices especially in the last few months of 2020. While we don't have the complete 2020 4th quarter report on the condo market (coming end of January), the stats below represent the first 3 quarters of the year and provide a good overview of condo sales heading into the end of the 2020.
Condo Rental Market
2020 kicked off with new restrictions around Airbnb which when combined the government pandemic measures in March (travel restrictions and business office closures) created a perfect storm to negatively impact the condo rental market. As bars, clubs, recreational sports and other social restrictions limited what people could do in the city, many students and young people packed up and moved out of the city, (many back to their parents homes). Condo lease listings began to pile up which meant more options for prospective tenants driving rental prices down. The smaller the apartment the more the rental prices were impacted. As mentioned above we don't have the complete Q4 condo rental report until the end of January below provides some Q3 stats as an overview.
What To Expect In The Single Family Home and Condo Market In 2021?
Vaccinations offer a lot of optimism for normalcy in 2021. What that will look like and when that will be is the million dollar question. Many of the real estate market trends we saw in 2020 will continue in 2021 and into 2022.
Single Family Homes (Detached, Semi-Detached, Townhomes)
When it comes to this real estate market segment, "Today Is The Tomorrow You Were Worried About Yesterday" and the best time to buy a single family home was quite literally, yesterday. Low housing/listing supply has been an on going issue throughout most of southern Ontario for years. This has been the biggest culprit for the sellers market driving home prices up month over month, year over year. The number of buyers far out-number the amount of listings in most neighbourhoods which will continue to create pressure on the market. Add to this some of the lowest interest rates in history and we are going to continue to see offer dates, multiple offers, bidding wars and buyer frustration throughout 2021. Make sure you have a realtor working for you that understands the market and how to navigate the intricacies of the process so you can get the home you want without added stress of continually loosing out on offer night.
Sellers. There is no un "salesy" way to say it. Now is the time to list your home! I say that with complete respect for your investment and although it sounds like a ploy by a realtor to get more business the reality is that the state of the market today and the low levels of inventory give you complete control of the sale and you will likely have buyers competing for your home which should result in a higher sale price.
Condo Apt Sales
It is highly likely that 2021 will continue to offer buyers of condos (especially in the 1-2 bedroom size) the most selection in years. Although new listings in December were largely absorbed/sold, new listings are expected to continue to hit the market early in 2021. Buyers should see downward price pressure on condos if demand stays lower than supply. The condo market in 2020 was quite balanced tipping further towards a buyers market and we may see that continue in 2021 and perhaps spill right into a buyers market. My advice to those looking to purchase a condo for themselves or for family members is that this might be one of the best times to purchase a condo in years. For investors looking to purchase as a source of income my advice would be to wait a little longer and see how the rental market fairs in 2021 Q1 & Q2 before you jump in. That being said if you can stomach some additional time finding tenants and dealing with rental rates that are a bit of moving target it is still a great time to purchase. (low rates & inventory).
Sellers. Your specific situation will ultimately dictate when you should list your condo now or wait. If you need to sell, you need to sell. However, If you have the ability to analyze the data in your building and surrounding area with your realtor you will be best served to make a decision to list based on what is on market in your neighbourhood, how much is on market in your neighbourhood, how quickly you need to sell and what might need to be done to help make your condo stand out. This is likely something that requires consultation with a realtor as the condo market is changing monthly.
For more information or a complete detailed market report from 2020 please don't hesitate to reach out to me anytime!
Wishing You A Happy and Healthy 2021!
PaulPosted by Paul Ambler on