The average price of a home in the GTA hit yet another all time high last month at 960K, but this definitely isn’t the whole story. Want to take a detailed look at the Toronto real estate market and the outside forces affecting it? Keep reading.

Uncertainties Abound

We’re getting tired of talking about these “uncertain times”, but it can’t be ignored that 2020 has been a wild ride thus far, and it feels like the hits just keep coming. As if a once in a lifetime pandemic weren’t enough, we’ve also been hit with environmental disasters, and a terrifying political situation for our friends south of the border. It feels like nothing can surprise us anymore– remember when the Pentagon released photos of UFOs?! 

We thought we were starting to see the light at the end of the tunnel in the early summer when COVID numbers started going down and businesses started opening back up, but now that we’re well into the second wave of COVID and the American elections are only a month away, many people are feeling the weight of pandemic fatigue and it’s easy to get bogged down in “what ifs?”. These next few months will be critical for the market and for our lives. These are some of the questions we’re asking:

• How will our government respond to the second wave of COVID and how will they support people and businesses throughout the next round of shutdowns?
• Will businesses survive the next few months?
• If Trump loses will there be a peaceful transfer of power?

Suburbs Soar

This probably isn’t new information– in fact, we’ve said it before, but the pandemic has brought with it an interesting trend. Buyers are trading their downtown condos for more space in the ‘burbs. With less traffic, shorter commutes, or no commute at all, a little more distance from the core doesn’t seem as inconvenient as it once did. And with no ball games to watch, museums to visit or restaurants to dine in, there’s a lot less city to miss.

Last month, the average price of a detached home in the 905 went up by 16.9% from the same time last year and the total number of sales in the 905 went up an astronomical 64% (year-over-year). 

Anecdotally, agents in other areas of the province are reporting that they are finding it difficult to keep up with the influx of Toronto buyers coming to their area. Most notably, this is happening in cities like London and Kitchener-Waterloo, but we’ve heard it from agents in rural areas as well. One thing is clear: people want more space and bigger yards and more than ever, they are willing to leave the city to find it.

Condos Fall

While the suburbs enjoy their moment in the sun, things look a little different for the condo market. Though demand for condos has remained largely unchanged, inventory has shot way up and it’s putting pressure on pricing. The rising supply can be attributed to four different root causes: 

1. AirBNB businesses are dead. We talked about this last month. The City of Toronto has officially changed the rules for short term rentals, making it virtually impossible to run an AirBNB business in the city. But owners had started selling off their units weeks before the announcement. COVID has killed tourism everywhere and vacancies had been high for months. Now, more and more AirBNB owners are either putting their units up for long term rental or they’re parting with their investment and putting up their units for sale.
2. Immigration is down. A large portion of condo market buyers are new Canadians buying their first homes. With immigration down this year due in large part to the pandemic, this is creating a surplus of supply of lower cost “starter” condos.
3. Condo dwellers are leaving for greener pastures. Stay at home orders and mass closures have resulted in a change in buyer ideals sending condo owners out to the burbs in search of more space. 
4. It’s been a good year for condo completions. Quite a few condo developments in the city have reached completion, meaning that there is an influx of new available units. This is actually great news for the city. It just came at an inopportune moment.

But are prices dropping? Yes and no. 

If we consider the year-over-year price changes we’re actually slightly up over this time last year. The median price for a condo in the core was 663K this September compared to 661k last September. That’s clearly not a huge gain, but it’s good news all the same. However, if we compare last month’s median price of 663k to when condo prices peaked in February of this year when the median price in the core was 738K we start to realize that we’re down about 11%. 

Is it time to hit the panic button? Not quite yet.

If you’re a buyer: Demand for condos in the city is still there. The core (C01) had 361 condo sales in September, up from 314 condo sales in the same area last year. So, while this may not be the right time to look for a short term investment (or even a long term investment, since vacancies rates are high) it could be a great time to buy something for yourself. Last month we helped some clients who thought they may never get into the market. Now they have a great unit and they’re building equity for their future.

We don’t have a crystal ball. We have no idea what the next six months have in store for us. And, we won’t know the bottom of the market until it’s already passed, so the best time to buy needs to be the best time to buy for you. Independent of the time of year or what exactly the market is doing. If you’re ready, there are opportunities.

If you’re a seller: The market has shifted and you need to be prepared for that. With so much competition out there, your unit needs to stand out. You can do that by working with an agent who offers staging and who knows how to price your property attractively to drum up interest. The good news is that most condo owners who “need to sell” bought 5 years ago when the median price was 405K, so you’re still up 64% from when you purchased. 

Highs and the Lows

So where are people flocking to in the GTA? We’ve compiled a list of the 5 hottest areas and the 5 coolest in Toronto real estate right now (based on average days on market [DOM])

Hot

1. Junction, High Park North, Dovercourt-Wallace, Emerson-Junction (W02) Proof that not everyone is heading out of the city – 8 DOM

2. Leslieville, Riverdale, Greenwood, Coxwell (E01) No surprise here. The east end has been on fire this year – 10 DOM

3. Oshawa Oshawa has long been an affordable area close to Toronto – 10 DOM

4. Whitby Family friendly with great daycares and community – 10 DOM

5. Milton More affordable than its popular neighbour, Oakville – 12 DOM

 Not-So-Hot

1. Willowdale East, Newtonbrook East (C14) Higher priced luxury properties – 36 DOM 

2. Richmond Hill Surely this depends on the property type/price as Richmond Hill has a variety – 34 DOM

3. Little Italy, Little Portugal, Trinity-Bellwoods, Kensington-Chinatown, Bay Corridor (C01) This area is dominated by slower moving condos – 30 DOM 

4. Church-Yonge, Cabbagetown, Regent Park, Moss Park (C08)  Like C01, this area has been flooded with condos – 30 DOM

5. Oakville This one is a surprise, but probably due to slower movement for condos + higher priced luxury properties) – 22 DOM

If you have questions about this, or anything else market or real estate related, reach out. We’d love to talk.