February 2021 - $1M Average GTA Price Breached - Market Update!!
The GTA Real Estate market ended February with a +52.5% sales uptick and a +14.9% price gain, year over year. The overall average GTA price for all housing types in February reached an all time record high of $1,045,488, breaching $1M for the first time ever. 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. However, the January and February average price has now broken the softening recorded in Nov-December! Is a new uptrend emerging due to renewed demand and low inventory, will we see the Law of Supply even this market out again?! Will suburban detached micro-markets soften?
Condo's led the way for sales in the 905 and were just shy the lead in the 416 with a +66.8% boost 905 and +63.2% 416, year over year, and Detached took the top spot for price gainers in both 416 and 905 with a +13.5% up for 416 and +27.8%(peaking?) move up for 905 in February 2021. Condo price still reported down -6.4% to $676,837 in the 416 – but the reversal has just begun – the last time the gap was this wide between Detached($1.3M GTA) and Condo($642,346 GTA), market dynamics flipped1. Currently, for the 416 condo market building inventory levels are dropping and months of inventory too which was 2 months in December, and for January it dropped to 1.38 months, now we are seeing 1.17 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. This still remains the hottest segment for price appreciation, detached numbers posted in 905 saw a +27.8% price uptick in February, year over year. Currently, a shift continues to occur as sales movement in all housing types begins to grow(which is great for the overall health of the marketplace). Has the Detached Market peaked around the GTA? We are eagerly watching Suburban Markets for a softening as the Law of Supply begins to indicate interesting signals. 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 almost all price appreciation posted by the 416 in February.
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 - while Semi saw a marginal gain over Condos in February – the difference is mainly negligible as Condos attempt a price uptrend. 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. From the trenches Condos are now receiving multiple offers and buyers are competing to get back into Canada’s most sought-after city, Toronto!
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.
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: email@example.com 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/mw2102.pdf
2GDP Stats here - https://www150.statcan.gc.ca/n1/daily-quotidien/200828/dq200828a-eng.htm
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