The real estate market has no signs of slowing down despite the second wave of the pandemic. In January we saw a strong real estate market once again and the sales volumes outperformed January 2020 by 50% with an average price increase on an average of 15.5% compared to the same month in 2020.
What is driving the Demand for Housing?
The good news is that the demand for real estate is not speculative. COVID has made many people realize that they need to move to a larger home to accommodate the need for more space given that many people are spending way more time at home. Phase 2 of COVID is quite different from the first phase when the real estate market came to a rather drastic halt from mid-March to the end of May. There currently appears to be increased confidence that COVID will soon get under control probably due to the beginnings of the rollout of the vaccine. The economy has also started to bounce back due to the support being provided by the government.
However, not all housing types or GTA areas have performed equally. We have heard rumblings of people preferring homes in the suburbs (905 area codes) and rural areas and the average sales prices definitely reflect this recent trend. Detached homes in the suburbs have seen average price increases of 36.6% compared to 16% in Toronto and all other home types have also seen higher average price increases in the suburbs compared to Toronto. Rural and smaller communities such as Waterloo, Hamilton, Barrie, and Guelph have also seen a dramatic increase in demand and hence price increases. Given the need for increased space since the onset of COVID, the Toronto Condo market has seen a dramatic increase in condo listings and an average price drop of 8.09%. However, once employees return back to work the projection is that the condo market will bounce back rather quickly. I have noticed an increased interest and activity in the Toronto Condo market starting the second week of January 2021. With the decrease in COVID cases and the rollout of the vaccines, the Toronto condo market may start to rebound sooner rather than later.
We started off in 2021 with a strong January, sales volumes are up 53.4% compared to January 2020 and the average sale price is up 15.5%.
As mentioned, the suburban 905 area code areas outperformed the Toronto real estate market with detached homes seeing the strongest average price increases in the suburbs.
Will the Real Estate Market Remain Strong?
The real estate market is the backbone of the economy and economists do not believe we are in a housing bubble as demand is not driven by speculation but there are legitimate wants and need for housing. The record-low mortgage rates will most definitely not change until 2023 and possibly later depending on the economic ramifications of COVID. In addition, the Federal government announced that we will be increasing immigration and are projected to bring 1.2 million new immigrants to Canada over the next 3 years. As the result, the demand for housing will continue to be strong for some time.
I was at an online conference about 3 weeks ago and an Economist made the comment “you think real estate prices are high now, just wait”. All the economic indicators suggest that once we get through COVID we will see an economic resurgence relatively quickly.
COVID has created a buying opportunity in the Toronto condo market that will most likely not last. We are however already seeing demand for condos increase but I project that in another 2 – 3 months we will most likely see the condo market in Toronto will start to bounce back as increased confidence in the marketplace and employers start to plan for employees to return back to the downtown core.
If you have any real estate questions or would like a market comparison to get a feel for what homes comparable to yours have recently sold for in your neighborhood - reach out it would be my pleasure to help and answer your questions.