The Toronto housing market remains strong despite current economic challenges, with average home prices hovering around $1 million driven by high demand with limited inventory. But while many realtors expect sales numbers to remain strong for the remainder of the year into 2021, things may start to cool off in certain markets (while remaining hot in others).
The current numbers reflect more than a 10% overall price increase from February 2019 to February 2020, with sales volume increasing almost 46% during that time. Sales were also very strong throughout this past summer after falling sharply in April due to COVID-19 shutdowns.
While at least one real estate forecast predicted a roughly 3% growth in Toronto real estate prices for 2021, the market has more uncertainties now affected by variables such as unemployment. Homeowners may be tempted to list their homes while property values remain high, with some cooling off predicted into next year.
Michelle Kam, a Toronto real estate broker, explains what to expect for Toronto’s real estate market in 2021.
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Michelle Kam On Challenges For Condo Market
In Toronto’s downtown core, condo prices are holding strong. In the new year, Ms. Kam sees the average price of condos in the downtown core remaining steady while the price of condos outside of the core may take a slight dip due to the fact that many buyers are opting to enter the housing market for more space as they are working from home throughout the pandemic.
However, buying a condo as an investment may be tougher, because of new rules that don’t allow home equity credit lines to be used as down payments. This could leave vacant units waiting for buyers for longer periods of time. Despite all this, more than 1,500 condos were sold in the city in August 2020, which is more than a 9% increase from the same month in 2019.
Detached and semi-detached properties continue their upward trend, the latter property type in particular. Stats show that sales of detached homes were close to 1,100 units in August, which is a massive 65% up from the year before. For semi-detached, there was more than an 81% growth from August 2019.
Buying behaviors have changed somewhat in the past several months, notes Michelle Kam. More people are looking for larger properties with enclosed yards, rather than condo units in high-rises. This has contributed to a rise in detached home prices.
Some Markets Continue To Be Hot
While there are many factors that could affect Toronto real estate heading into the New Year, the Toronto market has historically been in a world of its own, explains Michelle Kam.
That could mean while the average housing prices in the city take a dip in 2021, there could be certain pockets that maintain or even increase in value. For example, several neighborhoods are showing strong demand such as Wychwood, Crescent Town, High Park, the Danforth, South Riverdale, and several others. Recent statistics show that home prices have a lot of momentum in these areas, partly driven by investment in revitalization.
There’s also the fact that Toronto is a highly sought-after place to live. Thanks to its many amenities, transit, and night life, as well as being an ideal place to raise a family and its inclusiveness, thousands of people move to the city every year in search of employment and housing. In fact, prior predictions state that Toronto’s population will double by the year 2066, although immigration has slowed during the pandemic.
Toronto Housing Market Remains Strong Against The Odds
Because of the prediction that housing prices will cool off somewhat heading into 2021, some homeowners may be inclined to sell, says Michelle Kam. It’s difficult to predict how well property prices will rebound following the pandemic, so those who are thinking of maximizing their sales should act quickly with a qualified Toronto real estate agent, she adds. Although not as competitive as in the past, there are currently multiple bids on homes and some properties are still selling for above asking price.
Despite the new tighter rules for qualifying for a mortgage, interest rates are at long-time lows, which should help buyers in the long-term. Mostly, these rates will benefit those who were already looking to buy but were willing to put off shopping for a while.
However, while there could be some market correction to the skyrocketing Toronto estate market, it hasn’t showed any of the signs of a steep drop like some experts had been calling for. It’s clear the market has surged despite any real estate forecast that predicted a crash. The economic shutdown has not served to fracture the market, but rather push back the normal spring market activity that is evident now.
More Incentives Driving Activity
The impact of the CERB program ending, as well as mortgage deferrals coming to an end, could create some challenges. More homeowners may choose to sell while they can, which would increase housing supply and potentially depress the average selling prices.
Meanwhile, the Bank of Canada has loosened some restrictions on its mortgage stress test, which means Toronto real estate could be more accessible to a wider pool of buyers. Coupled with low-interest rates, there could be many people looking to get into the market for the first time or look at investment properties.
While there are still economic challenges and some job uncertainties, don’t expect the Toronto real estate market to follow suit, as it often surprises analysts, says Michelle Kam.
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