Once upon a time, Toronto’s housing markets moved with the seasons: spring was a hot time to sell; The summer was slow and sales rose again, traditionally in September and October. By December, many agents had turned south for the silence of the winter.
The pandemic changed that, bringing the hot start of 2020 to a near standstill that spring as businesses closed and people stayed home. The gap added to the already suppressed demand.
After the first lockdown, the market started a month-on-month climb to life till December 2020, when it retreated slightly. Strong open again this year. As of February, the average GTA house or condo sold for upwards of $1 million, and in May the average selling price peaked at about $1.12 million in GTA.
The traditionally slow summer has now seen sales contracts and listings tank, suggesting the new normal resembles the old pre-pandemic normal – albeit with higher prices.
Jason Mercer, chief market analyst at the Toronto Regional Real Estate Board (TRREB), expects this pattern to continue.
“In the fall I expect to see an uptick in transactions over the next month or two and then things close again as we move into the winter months,” he said.
But slow sales don’t mean the era of brutal competition and climbing prices is over, Mercer warned. Although sales declined on a month-to-month basis this summer, listings declined even more.
“In the absence of any meaningful increase in (housing) supply, the rental market and the ownership market should remain tight,” he said.
The competition is especially brutal on the most sought-after properties – detached and semi-detached homes.
Olga Marchenko, an agent with Right at Home Realty, is among those who believe home sales will hit more normal levels this year. But the lack of supply will continue to have a major impact on prices, she said.
A home it listed for $999,900 in the Royal York Road and Eglinton Avenue area sold this week for more than $1.5 million in a bidding war that attracted 40 registered offers.
Young families wanting to move from small condos to grassroots housing are generating that kind of interest, she said.
“The location was fantastic, (this one) detached house in the original shape, but a great lot,” Marchenko said.
It expects this year’s double-digit year-over-year price gains to cool off at a more modest pace next year.
Star asked Mercer and five Toronto agents what they expect to see in the market this fall. Here’s what they had to say:
Prices can’t rise, but they won’t fall
Mercer said price increases traditionally stop in declines. That doesn’t mean that prices will inevitably drop — it’s just that they probably won’t rise as dramatically as the first half of the year.
This winter and spring saw an extraordinary increase in home prices. With the exception of July, when the average home sold .11 percent less than last year, each month saw year-over-year gains in the double digits. In May, Toronto-area home prices averaged a record $1.11 million, which includes all types of homes and condos. By the end of August, the average was low at around $37,000.
In June, the real estate board raised its year-end forecast from $1.025 million to $1.07 million. Although the first half of the year played a big part in pushing the average higher, Mercer points out that the August average selling price was actually $1.07 million.
John Pasalis, founder of data-tracking Realosophy, says his instincts tell him that the market should cool slightly in the fall, but it will remain a seller’s market. The lack of listings means that buyers will still face stiff competition, especially for homes under or above $1 million that attract many buyers.
“I don’t see anything causing prices to drop anytime soon. The active listing for freehold homes in Toronto is 4,700, which is ridiculously low. Historically there were probably 11,000 homes for sale,” he said .
Outlook for suburbs and suburbs is less than clear
Royal Lepage’s Sandra Sheffield believes there is power in the spirit of working from home that has driven many families to move out of town. During the pandemic, home prices in the 905 have risen faster than in the city of Toronto as buyers want more for their money.
“I personally don’t see us going back to the office 100 percent and we haven’t ended up with COVID. A year ago we were talking about second and third wave. I don’t think any of us are expected to talk about a fourth wave,” she said.
“People have become less concerned about access to TTC. They want home offices now, and they want enclosed spaces, rooms with doors where they can retreat,” she said.
Realtor Tracy Nursal of Keller Williams in Oakville blamed COVID-19 for discouraging people from listing their homes. That said, many people are still too nervous to leave their homes or keep people inside.
But open houses have resumed and agents are accustomed to COVID-19 protocols on house tours.
“Some people made the jump from GTA to other communities. Smaller communities like Tottenham (more than an hour north of Toronto) and those small places just became more popular,” she said.
Whether the suburbs remain warm remains to be seen, Pasalis said.
“They’ve moved up a lot. In the past people used to leave the city to get a bigger, nicer house but the suburbs (in price) have gone up a lot. What you get for the price of your semi downtown just isn’t that attractive When you look at what you can get for the same money in the suburbs, that’s because the prices of suburban homes have increased by more than 30 percent, compared to 10 percent in Toronto.
Condo sales are back
Andrew Harild of Condos.ca doesn’t expect condo sales in the next two or three months to come close to the busy pace of the first half of this year.
But, he added, “there’s definitely been more listings since Labor Day. If the past few weeks are anything to go by, it’s going to be hectic.”
Harild cited more traffic, units selling out more quickly and offer dates coming back to condo listings.
Although there is a tendency for people moving in GTA, there is still a demand for downtown homes, he said.
“We are starting to see buyers for condos. Everyone has adjusted to the reality that we may be living in this pandemic for some time – they have to make the space work,” Harild said. If you can get it then you want that outer space. Couples are actually looking for work floor plans. They will stretch to try to get to that other bedroom or den so they don’t kill each other in the event of another lockdown. “
The condo market was flooded with supplies early in the pandemic, with young workers leaving the city, families looking for more space and new Airbnb rules. But Mercer points out that last month the prices of condos were up 9.4 percent year over year and sales were up 11 percent.
“It was that low side of the market that started things off but now the condo market is catching on,” he said.
Pasalis said the high prices of homes are feeding the condo market.
“Many young buyers are effectively paying the price to buy a home and are looking for a proper two-bedroom condo that they can settle for long term – an 800-square-foot unit they can afford for five years. can last,” she said.
Despite the cost, young families are still buying
Mercer said one reason condos have made a comeback this year is because first-time buyers are still buying homes.
The real estate board’s Ipsos polling late last year indicated that 40 percent of those looking to buy this year would be first-time buyers.
“The average homebuyer actually has more flexibility in their household finances than they are sometimes given credit for,” he said.
Sheffield said COVID-19 has helped many families increase their savings, the money they have invested in buying or renovating homes.
As COVID-19 subsides, Mercer said it will see the extent to which people start spending on other consumer goods.