It was a red-hot summer for the Toronto real estate market. It might not makes sense on the surface, considering that Canada’s largest city and the rest of the country are still muddling through a pandemic and a recession. However, once you start digging into the trends, you see that pent-up demand, historically low interest rates, and low supply are contributing to the surge in sales activity and home prices since the height of the virus outbreak.
In September, home sales in the Greater Toronto Area soared to an all-time high of 11,083 transactions – up 42.3 per cent compared to the same time a year ago. The average price of a home sold in the region climbed more than 14 per cent year-over-year to $960,772. And the GTA is witnessing sales across the board, with condominiums, detached and semi-detached houses, and townhouses experiencing double-digit growth, according to the Toronto Regional Real Estate Board (TRREB).
The sector has been playing a bit of catch up following the quieter spring amid the public health crisis. But can Toronto sustain this incredible surge in the fall? The RE/MAX Fall Market Outlook Report suggests that Toronto housing prices are expected to rise five per cent for the remainder of 2020, with demand exceeding supply and lower interest rates encouraging more people to enter the market.
One element of the Toronto real estate market that could come under pressure is the condo market. From COVID-19 to the transformation of the short-term rental market, condo prices might be unable to keep up with the broader housing sector. Does this mean a bearish autumn ahead? Let’s explore!
Fall Projections for the Toronto Condo Market
With the number of new COVID-19 infections rising across the province, led primarily by Toronto, it appears that the region is officially in the second wave. While most officials deny the possibility of returning to another lockdown, there is uncertainty surrounding the next several months, particularly with the cold and flu season on the horizon. This has spawned a unique dynamic in the big cities.
It has been well documented in recent months that a lot of people are fleeing the city and relocating to rural communities. After the height of the pandemic, many urban families quickly learned that they’re ready to trade their condo elevators for front doors that open onto streets and backyards large enough to stretch your legs. Plus, with the coronavirus protection measures transforming big city life, many of the city’s once-envied amenities no longer hold the same allure.
The short-term rental market, like Airbnb, has collapsed. Condo owners are either turning their units into long-term rentals or selling their properties. Hundreds are hitting the market, with thousands more to come once new construction is completed over the next two to three years. Demand may be rising, but the supply could overwhelm consumer trends. Therefore condo prices, as well as rents, are expected to decline in the coming months.
For the full report and to view all maps and charts continue to read on: RE/MAX.ca