Market Intelligence - 2020 Review
Based on the latest statistics released by Toronto Regional Real Estate Board (LINK to December 2020 Market Watch Report), the Real Estate market in the Greater Toronto Area had a very strong year - the third best year on record, in fact!
Yes, 2020 was a unprecedented year because the GTA just like the rest of the world dealt with health restrictions and uncertainty due to the COVID-19 pandemic, yet a total of 95,147 homes were sold, 8% higher than the number sold in 2019, and the highest number of homes sold since 2016.
January through March 2020 proved to be very strong for the real estate market. Sale volume was up by 22% by the end of Q1 compared to 2019, which was soon followed by a 42% plunge in sales activity for Q2 as we all faced dealing with COVID-19. However, sale activity rebounded in Q3 and even more so in Q4, leading to a December that saw a 65% increase in activity (compared to December 2019) and becoming the sixth straight month of record-setting sales.
Highlights for 2020 include:
The AVERAGE SELLING PRICE reached a new record of $929,699 – up by 13.5% compared to 2019.
Year-over-year sales growth was strongest in the GTA regions surrounding Toronto, particularly for single-family home types.
After a pronounced dip in market activity between mid-March and the end of May, market conditions improved dramatically in the second half of the year, with multiple consecutive months of record sales and average selling prices.
What became the common driver of activity was the fact that existing homeowners, in light of spending more time at home during the pandemic, wanted to upgrade their living spaces in search of more space. As a result, the growth in sales outpaced the growth in new listings, signalling a move back to Seller's market conditions in the GTA. By the end of 2020 overall inventory equalled only 1.1 months of supply (the lowest level ever recorded for the GTA as a whole!), suggesting upward price pressure can be expected for 2021.
A summary of the annual, overall AVERAGE SELLING PRICES for all property types at the end of 2020 vs 2019, by TRREB region, looks like this:
Demand, supply and price indicators for 2020 look like this (*source: Urbanation Inc anaysis prepared exclusively for Royal LePage Signature Realty):
What 2020 proved is that as the economy entered the initial lockdown measures in March, uncertainty was abound, stock markets plunged, and the home selling process had to adjust quickly to the new environment. Some analysts, including CHMC (Canada's national housing agency) called for a 10 - 20% decline in prices as job loses and mortgage delinquencies were forecasted due to the pandemic. In reality price growth returned to double digits by June, with record setting sales activity in the second half of 2020.
Yes, some, specifically younger, hourly wage workers unfortunately were faced with employment losses, while permanent, salaried employees were not as impacted. This reality led to very different results for the rental and ownership markets. And the realities of living through a pandemic drove the motivation for those who could to change their living arrangements (i.e. find more space, usually away from the core of the city). This, along with the fact that government provided unprecedented support for household income and kept the interest rates at lowest levels to keep mortgage delinquencies low, as a result, the demand for housing was very high.
It is expected that the economy will take a further hit during the winter as the GTA entered its second lockdown, but this does not seem to impact buyer confidence.
With continued low interest rates and a belief that an eventual return of market fundamentals such as immigration and job creation are to be expected, 2021 is promising to be another strong year for GTA's Real Estate market.