By: Mark Allen and Ari Armani

Capping off a record year in GTA Real Estate - December 2020 Market Update + 2021 Outlook!

Tags: Analyst, Toronto, Housing, Economic Growth, Markets, Real Estate, Investing, COVID, Home Sales, Market Stats

 

December 2020 - Market Update + 2021 Outlook!!
The GTA Real Estate market ended 2020 on a major high note with 95,000 homes sold and a 13.5% year to date price gain. December 2020 GTA sales ballooned with +64.5% sales uptick and a +11.2% price gain, year over year. The overall average GTA price for all housing types in December was $932,222. 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.


Condo's led the way for sales in the 416 with a +75.9% boost, year over year, and townhome’s took the top spot for price gainers with a +17.6% move up in price for December 2020. This is interesting because we’ve mentioned Semis and Detached almost all year. Condo price still reported down -4.7% to $625,828 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, +74.5% and +6.3% respectively1. Currently, for the 416 condo market building inventory levels are dropping and months of inventory too which was 3.6 last month, and for December it dropped to 2 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 +58.5% sales boon to a +22.7% price uptick in December, 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 under lockdown. 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.
 
Toronto Semi’s and townhomes were the hottest housing types per sales during August, September, October, November & December in the 416 – this trend moves along as the price gap hovers wide from Semi to Detached, trading at $1.16M compared to $1.475M for December 2020.

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 and sales. New 416 Condo listings are now down -106%, month to month, from November to December 2020. And fairly unchanged year over year as investment vendors wait and hold onto their units, or city dwellers find a renewed love for their city. The 416 active Condo listings are also down -57%, month to month, whereas they’re up +158%, year over year, for December 2020. This high yr/yr active listings number should smoothen out with bolstering investor and buyer sentiment, we wait to see. Investors are using low interest rates and negotiating on price to hedge their bets on the Condo market taking a long term approach to the economic engine of the country - Toronto. If you are a buyer or have been even thinking of buying a Condo – you definitely still have your chance at this juncture!! From the trenches, the market is starting to move, but you can get a deal in the right micro-market. Also, renters is it time to get a bigger unit? There is still some negotiation room as rental listings remain high in that sector of the market - ultimately due to the past numerous outside factors we’ve mentioned before. However, we still recommend purchasing a condo wherever/if possible due to the market conditions and record low interest rates.
 
Final Thoughts and Outlook 2021:
All told at year-end the market remains a mixed bag 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.

Our Outlook for the 2021 market includes; town, semis sales strength, condo sales+price comeback, a potential easing in the winter detached home demand for a sudden cyclical rush back to the burbs in the Spring market + low interest rates. As we’ve been saying since the beginning of the Pandemic your scenario is case by case, minute by minute, now, and it’s vital to dissect it and understand it. No one outlook or prediction is one size fits all, it’s important to fully interpret at your niche micro level. Call us to gain impactful clarity! We are predicting when Government decides to fully relax COVID lockdowns and travel restrictions, along with new immigration that Toronto will ultimately benefit the most and will enter a roaring recovery period bringing the Condo market along for the ride. Stay tuned for our new Market and 2021 Outlook video where we will elaborate more.

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 -2.2% for November, -3.5% in October 2020 compared to -8.1% in August and -11.5% in July4, while Canada’s economy shed 63,000 jobs for December5. 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 31,041 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/jobs-december-statscan-1.5865905
6https://www.bankofcanada.ca/2020/10/fad-press-release-2020-10-28/  
7https://www.thebalance.com/dow-jones-closing-history-top-highs-and-lows-since-1929-3306174

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

 

 



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