Patios are open and people are beginning to flood the streets of downtown Toronto. The prices are starting to stabilize, the rental market is making a comeback, and this is the biggest price gap we’ve seen in terms of average price of freehold homes vs. condos!

We said this last month and we’ll say it again, there’s no sense in comparing the numbers year over year because of the pandemic, so we’ll focus on comparing month over month as well as basing things on the 40-year trend.  

A More Stable Market… Yup, You Read That Right! 

It’s difficult to navigate the headlines out there, but because of the pandemic, comparing the stats year over year just doesn’t make sense – I know, I’m starting to sound like a broken record. If we look at the average sales prices across the GTA we’ve reached an all time high of $1.10m, this is the highest we’ve seen and it’s higher than what we saw in March and April, while this may seem daunting prices are beginning to level off. Steady growth in the market is a good sign overall, there has been an increase in pricing of 1.1% month over month from April to May, and this follows after the 17.7% increase that we observed from the months between January and March, which shows although there is growth and prices are beginning to stabilize. 

Based on the 40 year trend we’re seeing the prices of homes increasing by 6.5% a year, but in the last 10 years we’ve seen that double. If the real estate market were to follow the 40 year trend then homes should be selling at $950k, but homes are 15% above where they should be, but over the next 10 years we should start to see a pull back in terms of price. 

Many headlines seem pretty alarming and currently read “GTA home sales down 13% between April and May but prices still rising”. The month of May tends to be the strongest month of the year in terms of sales, obviously this year it’s a little different because of the pandemic. In May 2021 there were about 12,000 sales. The average amount of sales that take place in May is about 10,300, and the highest record of sales was in 2016 with 12,800 sales, so we actually aren’t that far if we’re comparing it to average sales for the month of May.

Is There Such a Thing As Too Many Condo Buildings?

It seems like everywhere you look there’s a new condo building going up, so how would we experience a shortage? With Toronto’s population growth as well as short term and long term immigration, the government has predicted that there will be about 150,000 new people coming into Canada in the next couple of years. Which if we’re looking at it from a real estate perspective, it would be about 375 condos with 400 units in each condo, and although it may seem like there’s too many condos going up we may actually be short about 150k units in the GTA, even with everything that’s being built as we speak. So if you were thinking the condo market will take a huge hit because the demand isn’t there, it’s definitely the opposite of that. The question now is, will we have the supply to keep up with the demand? 

The Rental Market’s Making a Comeback 

Here at SO&Co we believe the rental market is making a huge comeback, not only are we getting a strong amount of showings, we’re also getting quality tenants looking to lease a place in the city. We’re starting to see the biggest gap between the average price of freehold homes and condos, so what does this mean moving forward? 

When the pandemic first hit those living in condos had forgotten why they loved living in downtown condos, there are so many factors that contributed to this: 

• They didn’t get to take advantage of the amenities that they were paying for, i.e. the gym, pool, and common areas
• They had to keep their mask on as soon as they left their unit
• The lack of space and freedom people had; forced to being confined to their unit 

The attitude that people once had towards downtown living during the pandemic is all starting to change as we see the light at the end of the tunnel, people are excited to move back into the city and enjoy the city life again! 

We’re starting to see a huge gap in prices between houses and condos right now, those that can’t afford housing right now may be able to afford a condo, which is also a great investment piece. There’s a saying that we love going by here at SO&Co, “don’t make permanent decisions in a temporary situation”. When the pandemic first hit so many people began to panic and sold their condos, and barely got back what they put in, but those who stuck it out and weathered out the storm are now on the other side of it, high and dry. People are starting to move back to the city as workplaces are beginning to reopen their doors and the city is beginning to welcome everyone back, now we’re seeing quality tenants looking to move back into condos.

While we are still navigating this pandemic and living through precarious times, it’s important to focus our energy on the future. While the numbers were declining it is important to understand that this was because of the pandemic. The numbers are beginning to rise and the housing market will continue to grow as we enter a post pandemic Toronto. 

Worried about how these changes may affect you? Let’s connect and discuss your situation.