A sales report from the Toronto Regional Real Estate Board for August points to a record upward trajectory in the market. GTA realtors reported 10,775 residential sales that month – an increase of 40.3 per cent compared to August 2019. According to TRREB, sales were up over all major home types, in the City of Toronto and the surrounding GTA. Detached and semi-detached houses and townhouses drove the market. The pace of condo sales slowed a little. This is all despite the pandemic.
In their fall report, RE/MAX also points to an upward trend, pent-up demand and low inventory being the market drivers. The new work-from-home reality continues to push the market more outwards, to suburban markets. Thirty-two-per-cent of those asked say they no longer want to live in urban centres, according to a Leger study on behalf of RE/MAX.
RE/MAX brokers suggest there will be a 4.6 per cent increase in average residential prices across Canada during the remainder of this year. Now, how much has this uptick involved speculative buying, and how much “pent-up” demand, as RE/MAX says, really exists? What about when the rubber really hits the road, and a downturn in immigration numbers, for example, starts to impact the real estate market?
In terms of what is going in the luxury real estate market, with the TRREB report in mind, we went out to speak with sales reps for some feedback about what is going on right now at ground level.
Chilla Riddle, Sales Rep and Advisor, Engel & Volkers Toronto Central Brokerage
RL: TRREB reports a big uptick in sales for the month of August. What are you seeing at ground level? What segments of the market are doing particularly well? And why do you think that is?
Great to see August 2020 GTA Area sales reported 10,775 residential sales, a 40.3% increase from Aug 2019. Some of it may be due to an overflow of people that were in the process of buying and selling prior to the lockdown. Although the pandemic continues, real estate buyers are eager to move forward with their future plans. More so now since the majority are not taking vacation, thus increasing their motivation to be active in the housing market.
This pandemic has made us realize the importance of living space. Our homes have basically become our office and greater need for us to be more self-sufficient. These two functions are major factors in the sales of low-rise market segments (detached, semi-detached and townhomes, as TRREB reported). It is these segments that are the drivers of August 2020 sales.
RL: As TRREB reports, sales for condos were up, but not significantly. Why do you think that is and do you expect it to come back?
In the 416 condo sales for August 2020 almost hit double digits, reported at 9.2%, an increase of 1,536 transactions from a year ago. This data also reports an average price increase to $637,174, or 8.7% for this segment and area.
However, in the 905, condo sales did hit a double-digit increase of 14.5% (total sold units of 750) compared to a year ago. That bumped up the average price sold to $540,491 or 12.9%.
These numbers are encouraging considering we are still in a pandemic with lots of uncertainty. I think employers are re-evaluating the logistics of their operations. Some are likely finding their employees are productively working from home. Therefore prospective buyers may be focusing their investments at low-rise properties as opposed to condos.
RL: Are there opportunities for real estate investors now, in the condo segment (buyer’s market)?
Absolutely, there are still good opportunities for condo investment. Particularly 2+ bedroom units outside the Toronto downtown core. Considering the average price for a two bedroom rental in the 416 for August 2020 is $2,709, a lot of investors are looking at buying.
The other thing to keep in mind is GTA condo prices are on the rise, either close to or into the double digits. This tells us condos are still a good investment. We always need a place to live.
RL: Do you anticipate a continued rise in sales and price over the fall months? Or are buyers afraid of a second wave, and are you preparing for a possible impact of that on the market?
Life as we know it has been changed by this pandemic. It is hard to tell what will happen with real estate sales and prices in the fall. As we move forward we are learning more about the full impact of Covid-19. However, we believe people will still continue with their future plans.
We should all be prepared for a second wave, the best way we see fit. If that includes a home purchase and/or sale, stay in close contact with a trusted realtor that can answer your questions.
Katherine Minovski, Broker, Residential & Commercial Sales & Leasing, Royal LePage
RL: TRREB reports a big uptick in sales for the month of August. What are you seeing at ground level? What segments of the market are doing particularly well?
Since May we’ve seen an uptick in housing prices again and with the lack of houses on the market, they are flying off the MLS system. Even homes with “coming soon” signs are not making it online. Offer dates are completely acceptable again. But what I’m finding is at the lower end of the spectrum houses are still being listed slightly under with no offer date. They are still expecting and anticipating over-asking.
Work with your agent, let them research what July and August housing went for in the area. Don’t just assume asking is the final asking price. Even no offer dates are garnering above-asking prices these days. A house in the high $600ks will still bring in low-to-mid $700ks. That’s similar for housing in the high $700ks, garnering in the low-to-mid $800ks.
Christopher Bibby, Sales Representative, RE/MAX Hallmark Bibby Group Realty
RL: What are your thoughts on the Toronto region luxury real estate market now?
Generally the luxury market is still alive and quite vibrant. We have had a few luxury condominium sales in the Summerhill area this summer which were record-breaking. And we have seen high demand for quality product in smaller low-rise or mid-rise buildings downtown which are trending higher than before than pandemic. The more unique and higher quality the product, generally the suites are trading hands quite quickly.
RL: The TRREB reports are fine, but what are you seeing at ground level?
At the ground level, sales are still moving along. The amount of volume I am seeing in new listings this fall is much higher than years past so we just need to ensure we have purchasers for all of the new inventory.
RL: What is trending?
The freehold market is moving along quite nicely, especially three-bedroom single family homes. As the supply for this type of product has not increased whatsoever over the years the demand is much higher as of today, especially with the pandemic
RL: Where is the growth?
The growth as of today is in the single family freehold market, townhouse condominiums and boutique loft and condominium buildings. The smaller the better, I find, as the towers are not as robust as years past.
RL: Do you have any concerns about the market heading into fall?
I do have some concerns with regards to the absorption of supply in the condominium market. With travel restrictions, less immigration, foreign students not returning and some buyers now looking into the suburbs, we need to ensure that new inventory does not accumulate at a pace that well exceeds the current demand.