The weather is amazing, people are heading up to the cottage, patios are full, and the market remains strong, but we are starting to see prices level off. This month we’ll take a look at buyers purchasing power, what we can expect for condos, and what we can expect to see moving forward.
Sales were up during the month of June in comparison to last year by 28.5%, this puts June 2021 as the third best June on record, but despite all of this, sales are down from the March 2021 peak by 4,531 homes. The reason sales are down from the March 2021 peak boils down to purchasing power, those who wanted to buy already bought earlier in the year, so this means we can expect to see sales slow down a little. Although Supply and demand is what is keeping pricing strong, we’re beginning to see a decline in new listings, which are down by 13% and sales, which are down by 7%.
Are Buyers Purchasing Power Tapped Out?
On average sales prices in June sit at about $1.09m and this year in terms of year over year it’s up 17%, but in the last 4 months it’s remained unchanged. The main reason it’s remained unchanged is because those who were looking to buy a home have already purchased one closer to the beginning of the year, which leads to possibly having a slower end of the year in terms of sales. Another reason for the slight reduction in purchasing power could be due to the changes that were made to the mortgage stress test, although there was only a 4% change this may still play a factor. The pattern we’re seeing here with the sales slightly resembles what happened back in 2017, where the sales and new listing ratio is staying steady and that’s what’s keeping the prices in the rage they are currently at.
What Does the Future Hold for the Condo Market?
The gap between condos and houses on average in the GTA is $724,140, which is the highest it’s ever been, and because of this huge gap people are leaning towards purchasing condos instead of houses. This will also lead to rental prices tightening up and rental prices going over asking with multiple offers. Many investors are looking at this gap as well, seeing that many downtown offices are beginning to open their doors, so condos are looking more and more attractive. The future for the condo market is looking very bright, so if you’re an investor right now would be the time to get your hands on a condo!
Looking Forward
Now moving forward the real question on all our minds is, will we see a repeat of 2017, or is this the new normal when it comes to pricing? We are expecting sales and new listing volumes to continue to remain low during the summer months, because people are busy going up to the cottage, taking advantage of patios and enjoying the summer… I mean we have been cooped up for way too long! This is also pretty consistent with the seasonal norms. We expect the market to pick right back up in the fall as people come back to the city. Job creation, immigration and low interest rates is what may help add to the market in terms of growth, because the rush to purchase during the pandemic has died down, and the rush is what contributed to the numbers in March 2021. Besides all of this we are still seeing multiple offers… if the homes are priced right and marketed well, so we are starting to see a shift in pricing strategies.
The market has remained strong but we are currently at a standstill, while people are busy enjoying the summer and taking advantage of the weather and the city reopening. But we have a feeling it’ll pick up as soon as summer’s over… and we’re ready for it!
