Average price hits $1 million
You read that right. For the first time ever, the average price of a home in the GTA has hit the $1 million mark. The writing’s been on the wall for months. Over the last year, we’ve watched the numbers climb steadily higher despite the global pandemic and resulting lower immigration rates.
The last time the market peaked was 2017. Remember that year? We definitely do. The hype surrounding the real estate market was unreal and prices escalated seemingly at lightspeed until the government stepped in to cool things down.
What you may not be aware of, is that after the government intervened, a few areas of the GTA took a big hit on price. In Aurora, for example, the average price of a detached home in March of 2017 was sitting at $1.48m (pre-invention). In January of 2018 (after the government stepped in) that number fell to $1.08m. Today, the average price of a detached home in Aurora has climbed back up to $1.53m (Feb 2021). The takeaway? There may be ups and downs, but in the long run real estate is still a solid investment.
Supply is up… but so is demand
We talk about Toronto’s supply issue all the time and we’re not alone. In fact, it’s probably the most widely discussed topic in real estate news across the GTA. For years, market experts have given interviews and written articles over and over and over again about the rock bottom inventory levels in our market and we’re here to tell you that those levels are finally rising… Unfortunately, so is demand.
Despite a recent rise in available inventory, consumer confidence is soaring right now, and all that shiny new inventory popping up keeps being absorbed immediately. This is great news if you’re an investor or you’re looking to sell, but for first time buyers with less buying power? Not so much.
In the fall, the vast majority of the demand was concentrated in the freehold market and condos were still suffering, but it seems that buyers started taking notice of the opportunities to be had in the condo market, because the heightened demand is now being seen across the board.
Multiple offer situations in the condo market are back, and the number of condo sales is up 63%! It’s typical to see 1,500-1,900 condo sales (throughout the GTA) for the month of February. This year, that number was 3,116! As you can see in the chart above, the average price hasn’t quite recovered yet, but in our experience, price is a lagging indicator of demand and we wouldn’t be surprised to see prices exceed their pre-pandemic record (from February 2020) if trends continue.
What’s most interesting about the current level of demand is that the vast majority of it seems to be coming from local, end users. COVID restrictions have put a serious damper on immigration and foreign investment. With this in mind, the biggest question we’re asking is: What happens when borders open back up and foreign buyers return to our market in greater numbers?
Mortgage rates creep up
Despite the Bank of Canada holding true to their word and keeping the overnight lending rate low for the foreseeable future, pressures in the bond market are pushing fixed mortgage rates upward.
Some lucky buyers, who were pre-approved before rates started to climb, are using the spring market to buy their homes before those pre-approvals expire, and this group of very motivated buyers is obviously driving some of the demand right now.
So, what does this mean for the market? Only time will tell, but we’ll be watching closely to see if the higher rates will take a little pressure off the market over the next few months.
What we’re seeing on the ground
Let’s put all this into perspective with a few anecdotes of our own from the last few weeks.
The freehold market is HOT, and not just at the $1m and lower mark where we expect to see a lot of action. Two of our listings, 205 Riverdale Avenue and 35 Thome Crescent– which sold for $2.2m and $1.8m respectively, saw significantly more competition than we would normally expect for that price range.
205 Riverdale Avenue, a beautifully renovated semi in Riverdale, had over 100 showings in 5 days, and went almost $550K over the asking price– setting a record for the highest sale price ever for a 2-story semi in the area*.
35 Thome Crescent, a 3-story detached fixer upper on the edge of the Davenport Escarpment, had over 60 people walk through the doors (a lot of action for a property that needs work) and ultimately sold for $400k over asking.
It’s not just freeholds enjoying some competition. As we mentioned earlier, condos buyers are back out in droves and our sellers are reaping the rewards.
260 Sackville Street #504, a one-bedroom unit in Regent Park, got 2 bully offers its first day on the market and in the end, sold for 10k more than a similar unit on a higher floor which had sold a week before.
55 Centre Avenue #2406, a beautiful 2 bedroom plus den in the heart of the city, didn’t sell last year. We listed it again in February of this year and it was snatched up in 4 days!
*As per TREB MLS reported sales in Toronto MLS districts E01/E03 at time of sale Mar 9, 2021 (which includes Riverdale, Leslieville + Playter Estates)
Have any questions about what this means for you, or just want to talk real estate? Reach out today. We’d love to hear from you.