The recovery is complete! After a torrid start to 2020, the Toronto Housing Market went into quite the funk as we paused for the Covid-19 Pandemic Lockdowns. The first quarter showed promises of 2020 being a record breaking year in Toronto Real Estate. As the second quarter started, the seriousness of the pandemic emerged and the market was stopped in its tracks.
By the end of the second quarter, we were starting to see signs of the market poised to break out. And break out it sure did! The third quarter saw the strength of the market return to resemble what we saw in Q1.
Contrary to reports of the market facing huge losses, and up to an 18% price drop, the market started to rebound. Led by pent up demand and low interest rates, buyer confidence returned. Heading into the third quarter, we saw spring sales shift into late summer and fuelled what would be record numbers for July, August and September.
The important thing to remember is that this is a-typical for the market. Thus, the record breaking numbers will be tough to achieve next year during these same months as we hope to return to a normal real estate cycle. When we have outside influencers, like the covid pause, we need to look at a greater cross section to determine how the market is doing.
Looking at the entire year-to-date, we see just how resilient the Toronto Real Estate market has been. YTD, we have just surpassed the total for units sold during the first three quarters in 2019. During the period January to September 2019, we saw 67,957 transactions. In 2020, we see 68,793 transactions over the same time Frame. This is an increase of 1.2%! Not many would have predicted this back in March or April. What a turnaround!
As mentioned before, what was predicted was a 9 – 18% price drop. How are the pundits faring with that forecast? The shift in mix (less condo sales, more detached sales), combined with the pent up demand, has driven average price up. One of the contributing factors is the limited inventory we have available. New listings are down 4.7% over the first three quarters. This is off an already limited supply last year. With sales being up, inventory down, it’s no wonder we are seeing huge increases in average price. The YTD Average Price is up 13.3%. This is a significant increase, and those that continue to wait for that fictitious price drop that was predicted in the spring, will be left on the outside looking in. With average price in the Greater Toronto Area hovering just below the $1,000,000 mark at $920,168, you’re looking at an opportunity cost of $118,000 if you listened to CMHC and waited for a price drop.
There is no immediate relief coming in terms of increased inventory which would in turn cool down the market and stabilize the upward pressure on price. If your goal is home ownership, you need to act now. Take advantage of the low interest rates and get into the market asap. My projections for Q4 are that we will see continued growth in units sold. I’m sticking with my original prediction for 2020 of 92,000 sales. For those on the fence, it’s time to jump off. Although 13% price appreciation is not healthy or attainable over the long term, I do expect prices to appreciate at a healthy 6-7% over the latter part of 2020.