By: Mark Allen and Ari Armani

The Market is back in action in 2021. Condo comeback imminent!

Tags: Budget, Toronto, Housing, Economic Growth, Markets, Real Estate, Investing, COVID-19

January 2021 - Market Update!!

The GTA Real Estate market ended the first month of the year with a +52.4% sales uptick and a +15.5% price gain, year over year. The overall average GTA price for all housing types in January was $967,885. Notably, we've seen the GTA overall average price increasing month over month since February/March 2020 and since June 2020 - to new record highs each month. This remained the story until the month of October, whereas now November & December have come off the highs. An emerging trend we are hoping continues to bring balance back to the overall marketplace. The January average price has now broken the softening recorded in Nov-December!



Condo's led the way for sales in the 416 with a +85.5% boost, year over year, and Semi’s took the top spot for price gainers with a +21.5% move up in price for January 2021. Condo price still reported down -8% to $624,886 in the 416 – but if demand continues there may be a reversal in price declines. Meanwhile, Condos in the 905 saw sales and price gains, +85.5% and +4.8% respectively and the total GTA average price was $600,8301. Currently, for the 416 condo market building inventory levels are dropping and months of inventory too which was 2 last month, and for January it dropped to 1.38 months! We are also seeing investors return to condos as they kick off the malaise of a misplaced outlook on Toronto’s world class downtown core.



Trends, Intel and Opportunities:
The biggest trend of 2020 was the perpetual flight to the suburbs and even rural detached homes. The detached numbers posted in 905 sales ended with a +35.4% sales boon to a +36.6% price uptick in January, year over year. Currently, a shift may be occurring as sales movement in all housing types begins to grow(which is great for the overall health of the marketplace). Are we still concerned cottage country will become the new burbs? Time will tell - however, we wait to see what will happen when businesses call employees back to the office in the city as we are still currently attempting a re-opening around Ontario. If you’re already living in the outlying areas of the GTA – do you Sell your detached and buy a condo, or move further North? There are ways to capitalize on the delta between lower priced housing options, or locales if you’re a downsizer. An interesting tidbit 905 outpaced all price appreciation posted by the 416 in January.

 

Toronto Semi’s and townhomes were the hottest housing types per sales during August, September, October, November & December in the 416 and suddenly in January Condos took over as hottest housing type. Will we start to see a new trend with Condos taking over sales and price appreciation? The last time Detached and Condos diverged there was a massive gap in price of 30% - and then a massive boost in Condo price over time as Detached peaked out.


Now back to the Condo Market, which has been experiencing price flattening due to an influx of supply, although a reversal is taking place for supply(supply was down more so last month) and sales. New 416 Condo listings are up month to month, from December 2020 – January 2021 and up year over year. However, if we continue to see the sales demand outpace listings growth we will most likely see renewed price growth for the Condo segment later in the year. From the trenches Condos are now receiving multiple offers and buyers are competing to get back into Canada’s most sought-after city, Toronto!

 

Final Thoughts:

All told, we are still in mixed market which seems to be shaking up due to renewed buyer confidence/or backstop/hold in high rise, leftover pent-up demand held up in city condo sales, investor comeback, low rates and FOMO. We are watching the return to the city closely as re-opening occurs and the city roars back to life post-COVID.


Economic Snapshot:
The economic landscape in Canada is still manoeuvring through a trough attempting recovery in the business cycle and this may last for some time as repeated lockdowns are implemented. Real GDP numbers on an annualized basis(this is the most confident indicator) were up for Q3 2020 posting a gain of 40%1 after a Q2 loss of 38%2. However, we are realists and the new lockdowns may hamper the Q4 gains and Q1 2021 – something Economists call a false start recovery, or a false signal. It should be noted that Canada and Toronto are pre-dominantly service-based economies. Although, the current goods to services ratio has been de-railed by lockdown measures as monies exit Canada for goods, and services suffer. Recent information shows Canada’s service sector dropped twice as much by 16.7% and the goods sector only took a hit of 8.7%3. Business associations and Governments need to encourage creative ways to support the service sector through COVID restrictions.

Employment growth is currently on the mend. Toronto employment growth was down -2.3% in December, -2.2% for November, -3.5% in October 2020 compared to -8.1% in August and -11.5% in July4, while Canada’s economy shed 213,000 jobs for January5. With continual changes in restrictions and complicated lockdown measures the employment market Is shifting from on the mend to being a hampered market once again.

The Bank of Canada has maintained their monetary stimulus QE program, however, lessening the amount spent from $5B to $4B per week, all while calling on Government to provide more fiscal policy stimulus(from October). Bank of Canada also held interest rates recently at the lowest historic level of .25% and BoC has asserted low rates will be mainstay until at least 20236. On the tip of all the stimulus and various other macro and micro factors, equities markets forge ahead as they are predominantly forward-looking. With the recent rollout/implementation of a 90%+ effective vaccine and hope for a stimulus breakthrough in the US the Dow recently saw new record highs at 31,458 pts+, a TSX all time followed at 18,000 pts+ on the horizon of a hopeful timeline for a new normal7. Going forward through 2021 we hope to see the vaccines continue to rollout en masse putting an end to lockdowns and for the trough to break into a full recovery period with the help of low rates, unhindered private enterprise, job growth, consumer confidence and ultimately healthier markets.


Questions or looking to make a move? Email us: info@origingroup.ca or call 416 205 0355 ask for Mark or Ari.

1,4TREB data from and full TREB numbers here - https://trreb.ca/files/market-stats/market-watch/mw2011.pdf
2GDP Stats here - https://www150.statcan.gc.ca/n1/daily-quotidien/200828/dq200828a-eng.htm

3https://www.theglobeandmail.com/business/article-canadians-are-buying-record-amounts-of-goods-services-not-so-much/

5https://www.cbc.ca/news/business/canada-jobs-january-1.5902308

6https://www.bankofcanada.ca/2020/10/fad-press-release-2020-10-28/  

7https://www.thestreet.com/markets/stock-market-dow-jones-industrial-average-disney-covid-stimulus-021221

#Toronto #RealEstate #GTA #MarketStats #Markets #Canada #Condos #Homes #SuburbanFlight #COVID

 



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