What do the November numbers tell us about GTA’s real estate market? The exodus from the core continues. Small downtown condos continue to take a hit while anything with a green patch is in strong demand, especially in the suburbs. As is typical of November, demand (sales volume) is down compared to October. It’s down by an average of 13% in the GTA, however, supply (available listings) is down by a whopping 26%, causing strong upward pressure on prices. Detached, semis and townhouses in Durham and Halton continue to see the biggest increases in prices, as has been the case for the last few months already. Below is the market update for November 2020.
Exodus out of the downtown core… continues
A trend that’s developed since the early summer months has continued in November, however not to the same degree. In September downtown condos were in a buyers market, with moderate to strong downward pressure on prices. Currently, there are 2244 available listings in the downtown core (TREBB areas C01 & C08) while 612 have sold in the past 30 days (3.6 months of inventory). That represents a more balanced market than what was happening just two months ago. For example, in September there were 2995 condo listings available in downtown Toronto, only 567 sold an absorption rate of 5.3 months of inventory.
Emerging trends during Covid-19
- Covid killed downtown condos, especially micro condos. Investors are bailing and owners are bailing for a larger space while working from home. Suburban homes with a backyard have exploded.
- The further out you are from the core, the higher the prices have increased. There is a real exodus out of the city.
- Downtown condo rents have fallen as much as 20% to 30% while the suburbs have seen slight price decreases.
- The main driver of the demand during covid has been rock-bottom interest rates. 5 year fixed rates are below 2% right now.
Covid 19 & GTA real estate | What’s next?
At the beginning of the pandemic, many predicted that housing in the GTA will come down significantly. That hasn’t been the case. On average GTA housing prices have surprisingly gone up since COVID-19 started wreaking havoc in our lives in March of 2020. Assuming that the end of the pandemic is near, with vaccinations starting as early as next week, we can expect things to be back to normal by the end of 2021. What does that mean for the real estate market?
Once herd immunity is achieved we can make some safe assumptions. First, the economy will be much better than it is now. Unemployment rates will diminish, people will go back to work more regularly, students will go to universities and colleges and restaurants will be full again.
Covid-19 surprisingly increased property values for the majority of the GTA and I believe that a successful vaccine may do the same. With the expectation that most people are vaccinated by this time next year, we can make some assumptions. The economy will be doing better, people will go back to work, students will go back to renting close to Universities & colleges and commute times for all those that have “escaped” the core will be very long. Downtown will repopulate and buyers will once again remember why people want to live in the core. If you are considering buying a condo downtown it may be a good time to do it before that happens. All of those are signs of another increase in prices on the horizon. One side effect of an increase in demand in the core may be that demand will suffer in the suburbs. To what extent remains to be seen.
MARKET UPDATE NOVEMBER 2020
What is an absorption rate or months of inventory?
The Absorption rate or months of inventory (M.O.I. for short) is deemed as the most accurate way to pinpoint whether a market is in favour of sellers or buyers. Found by comparing home sales versus how many listings are currently on the market, M.O.I. essentially asks the question: How long would it take for every single property to sell if no new homes were put up for sale?
LOW-RISE (detached, semi, & townhomes)
As indicated by the months of inventory report or MOI, in November low-rise properties have continued the trend of strong price appreciation. Detached homes in the GTA have had moderate to strong upward pressure on prices in November lead by Durham region (0.6 M.O.I.) closely followed by Peel (0.9 M.O.I.) & Halton (1.1 M.O.I.).
Toronto (1.5 M.O.I ) and York region (1.7 M.O.I.) are also in seller’s markets but not as scorching hot as the others. Semis are an even hotter ticket with absorption rates below 0.8 M.O.I. across the GTA, representing a very hot seller’s market with very strong upward pressure on prices. Freehold and condo townhomes are in a seller’s market across the GTA (below 0.9 M.O.I), with only Toronto having a moderate seller’s market at 1.5 M.O.I.
HIGH-RISE (condo apartments)
The condo market is in a balanced market for most of the GTA. The exception is Durham region (1.3 M.O.I.) which still has moderate upward pressure on prices. One thing of note is that Durham region only had 50 condo apartments sold for the entire month. The rest of the GTA is in a more balanced market for condos. Halton region (2.1 M.O.I.), Peel region (2.7 M.O.I.), York region (3.2 M.O.I.) and Toronto (3.6 M.O.I.) are in a balanced market with little to no movement on prices. Generally speaking, the areas that have declining prices have been those that are predominantly NON-OWNER occupied. Travel restrictions, lack of Airbnb activity and dropping rents have caused investors to bail. My personal opinion is that by the end of next year we should see a rebound in prices for condos in downtown Toronto.
Would you like to know what’s happening with home prices in your area?
You might also like these recent posts
- Congrats! Your offer is accepted! Now what? How to prepare for closing day
- Everything you need to know about Bill 184 | Info for Landlords and Tenants
In the news
- Toronto’s languishing condos put mom-and-pop investors in a bind – Courtesy of BNN Bloomberg
- Canada planning foreign buyers tax in effort to lower country’s housing prices – Courtesy of Global News
- National Bank Of Canada Tells Investors They’re Preparing For Real Estate Price Drops – Courtesy of Better Dwelling
- TRREB Calls For Evidence-Based Decision On Toronto Vacant Home Tax – Courtesy of Globe News Wire