real estate

Toronto Housing Market Predictions

Toronto Housing Market Forecast

GTA home sales continue to ease from March’s big numbers, but it’s still a sellers market.  Bidding wars and all cash sales are the order of they day as home buyers fight for a reduced supply of homes for sale in GTA area.

June’s average house price is up 17% vs 12 months ago to $1,089,536. While the prices is down 2% from May, demand has actually dropped considerably and supply is down as well. Yet the forecast for the coming 6 months is for the market to heat back up.

Buyer’s fatigue, summer, high prices, and more are resulting in fewer buyers in the market.  But buyer euphoria still exists in the GTA market driven by a fear of missing out, and the belief of some that new homes won’t be built and house prices will only rise in the next 5 years. They may feel now, with low interest rates, is the time to buy.

It’s not just a shortage of properties in the GTA, it’s the government (Federal, provincial, municipal governments) who ideologically bound to suppress land development and home construction. Once immigration resumes full scale, we can expect prices of everything to escalate. The 2nd half of 2021 is expected to be better than normal, yet CMHC forecasts a slower housing market for 2022.

While the primary focus of policymakers has been artificially curbing demand, the only long term solution to affordability is increasing supply to accommodate perpetual housing needs in a growing region,” said TRREB President Kevin Crigger.

In June, the average home prices dropped by 2% compared to May 2021 yet is still up 17% from 12 months ago.  Total listings on the market in June were pretty well the same as in June 2021, during the pandemic shutdown. Days on market are down from 26 days last June to only 17 days this June.

Toronto is rated as the 5th most unaffordable cities and housing would be one of the key costs.

Home prices dropped dramatically in Aurora, Markham and King.  Toronto Central, Uxbridge and Bradford West Gwillimbury saw the largest growth in prices.  The condo segment has recovered well and is expected to continue given the shortage of units, the demand from new immigrants, returning workers to the GTA urban areas (Toronto).

For the 2022 forecast, Royal Lepage’s CEO Phil Soper is forecasting the aggregate price of a home in the Greater Toronto Area will rise 14.5% in the fourth quarter of 2021, vs Q4 of 2020.  This means the Toronto real estate market is about to heat up as businesses reopen.

Screenshot courtesy of TRREB.
Screenshot courtesy of TRREB.

“There has been strong demand for ownership housing in all parts of the GTA for both ground-oriented home types and condominium apartments. This was fueled by confidence in economic recovery and low borrowing costs. However, in the absence of a normal pace of population growth, we saw a pullback in sales over the past two months relative to the March peak,” said TRREB President Lisa Patel.

Screenshot courtesy of TRREB.

Year over year sales/price changes are not highly indicative of where the market is moving, they clearly show demand is very strong. Since the recovery hasn’t started fully, we can expect huge price gains this summer as more potential home buyers regain their financial confidence.

Toronto Housing Market Summary. June 2021
Toronto Housing Market Summary. June 2021. Screenshot courtesy of TRREB.

Toronto home prices are on quite a rising tangent still, being up 19% on average year over year. I’m only one of a few who are predicting higher home prices this summer.  The demand for space is still high and buyers will pay extra for house outside of the GTA.  Millennials show no quit in their desire to buy a home rather than live in a Toronto condo. Since half of them are using the bank of mom and dad, they likely will get a co-signer helper plus cash to buy a home. Their parents might be eager to get them out of their homes and started on marriage and a family.

See more on January’s Toronto condo market report. As we progress to summer, condos will become the big Toronto housing market story. But for now, houses are the object of everyone’s affections.

Detached Home Prices History in GTA — TREB 2021
Toronto Region Cities June 2021 January 2021 August 2020 July 2018 Price Change last 5 Months Price Change Last 32 Months
Burlington $1,490,497 $1,379,247 $1,184,945 $983,649 7.5% 52%
Halton Hills $1,280,264 $1,379,247 $1,046,213 $817,493 -7.7% 57%
Milton $1,308,112 $1,153,009 $1,044,360 $865,283 11.9% 51%
Oakville $1,874,551 $1,891,326 $1,582,531 $1,316,233 -0.9% 42%
Brampton $1,196,507 $1,168,068 $989,039 $818,114 2.4% 46%
Caledon $1,611,711 $1,458,630 $1,185,251 $964,864 9.5% 67%
Mississauga $1,524,060 $1,484,987 $1,307,832 $964,864 2.6% 58%
Toronto West $1,477,707 $1,423,355 $1,270,053 $1,056,625 3.7% 40%
Toronto Central $2,492,536 $2,164,438 $2,385,278 $2,308,516 13.2% 8%
Toronto East $1,259,276 $1,234,632 $1,118,506 $969,928 2.0% 30%
Aurora $1,534,046 $1,718,745 $1,259,424 $1,064,983 -12.0% 44%
E Gwillimbury $1,387,309 $1,197,508 $1,023,943 $931,082 13.7% 49%
Georgina $863,479 $812,870 $731,183 $632,831 5.9% 36%
King $1,983,171 $2,290,996 $1,774,480 $1,354,955 -15.5% 46%
Markham $1,624,818 $2,290,996 $1,465,417 $1,245,748 -41.0% 30%
Newmarket $1,236,421 $1,143,739 $1,050,862 $879,938 7.5% 41%
Richmond Hill $1,752,711 $1,738,334 $1,563,718 $1,405,514 0.8% 25%
Vaughan $1,718,295 $1,677,489 $1,389,040 $1,339,361 2.4% 28%
Whitchurch Stouffville $1,515,183 $1,388,650 $1,219,385 $923,296 8.4% 64%
Ajax $1,040,083 $1,104,842 $862,454 $723,095 -6.2% 44%
Brock $821,572 $721,438 $660,183 $534,553 12.2% 54%
Oshawa $874,538 $832,217 $672,522 $616,559 4.8% 42%
Pickering $1,275,231 $1,239,939 $973,291 $535,153 2.8% 138%
Scugog $988,453 $894,575 $919,542 $793,460 9.5% 25%
Uxbridge $1,542,962 $1,311,870 $1,089,997 $681,613 15.0% 126%
Whitby $1,111,999 $1,060,852 $886,322 $725,885 4.6% 46%
Orangeville $894,047 $804,671 $705,254 $590,299 10.0% 36%
Bradford West Gwill $1,177,614 $1,017,840 $874,168 13.6%
Innisfil $964,054 $857,111 $766,834 $554,226 11.1% 55%

 

City of Toronto Home and Townhouse Prices

City of Toronto Home Prices.
City of Toronto Home Prices. Screenshot courtesy of TRREB.

TRREB Issues 2021 Market Outlook

MLS home sales reported through throughout the full TRREB region to reach 105,000 in 2021

  • strong sales will result due to the resurgent economic recovery, including jobs and record or
    near-record lows for borrowing costs
  • new condominium apartment listings will slow, particularly in the latter half of 2021
  • low-rise condo listings will be constrained, with total new listings around 160,000 for the year
  • low-rise homes  including detached houses will be in low supply with sales rising faster than listings
  • average selling price for all home types in the region will rise above $1,000,000
    and may reach $1,025,000 (+10% year over year price growth)

Interestingly, TRREB’s research partner believes zoning restrictions are the top problem darkening the Toronto housing market outlook.

Allowing conversions of single-family houses for additional units could result in the rapid addition of 300,000–400,000 units in Toronto and would make a major contribution to addressing housing
affordability. Increasing the missing middle can also stabilize the population while helping to sustain
schools, social and retail amenities,” said Joe Berridge, Urban Strategies Inc. Partner.

Since local governments are clearly NIMBY’s, freeing up land across Ontario is not likely. These restrictions may be the number one factor in the Toronto housing market, and until public outcry reaches a fever pitch, with homelessness rising too high, home prices can only soar further.

Home sales in January 2021 vs 2020 jumped an incredible 52%, and was up 2% from December. With prices rising and no economic backing (more lockdowns) and rising mortgage rates, experts and media are beginning to send out warning signals to prospective buyers.  Yet buyers, gripped with the fear of missing out, might see rising mortgage rates as a reason to crowd into this difficult residential real estate marketplace.

Is a housing market crash even thinkable, given the recovery is so near?  Is a quick downturn more likely in 2022 as government stimulus in the US dries up?

Toronto Home Sales Unusually Brisk

February’s jump in home sales makes us wonder how many homes will come onto the market as prices peak above record highs.  Supply won’t meet demand however as the economic recovery takes hold by July.  With the pandemic migration still on, we’ll see big increases in sales and prices in Richmond Hill, Aurora, Newmarket, King, and Bradford and up into Simcoe County and Innisfil.

2020 ended with a record selling average home price of $930,000 which was 11.2% higher than 2019. And there was a record 7180 home sales just for December and that was a 64.5% increase from December to December.

The average detached house price rose 42% in the 416 district to an astonishing medium of $1,475,758. Houses rose 58.5% in the 905 area code to a high of $1,175,753.

Condo Prices and Sales in Toronto

As the pandemic eases, we’re seeing a strong return of condo sales and condo rentals in the GTA.  With supply high, buyers are able to get a better price, but sellers aren’t having to lose much in the sales price. Across the TRREB  districts there were 767 condo townhouse sales in May at an average price of $761,266.

Condo Sales Toronto Q1 2021.
Condo Sales Toronto Q1 2021. Screenshot courtesy of TRREB.

Work from home won’t end as employers will cringe at continuing to pay Toronto commercial office rents and are buoyed by the lower cost of remote working.  Yet the exodus from the inner city in Toronto will slow as practical issues of high home costs, lack of home supply, and distance to the office take over.  Condo sales and prices are already starting to recover.

2021 Toronto Housing Market Prediction

My prediction for the Toronto housing market, is for strong price growth and sales from March to August.  Prices should rise another 10% by August.  This is all based on current demand and the spring economic recovery.  Of course, now in May, we’re seeing the 3rd wave slow down the real estate market and reduce sales and prices. We should see price growth resume in June.

TRREB Chief Market Analyst Jason Mercer added in this month’s report: “While the pace of price growth could moderate in the coming months, home prices will likely continue on the upward trend. Renewed population growth over the next year coupled with a persistent lack of new inventory will underpin home price appreciation.”

Canada’s economy grew 9.6% in 4th quarter 2020 and that beat analyst expectations of 7.5%.  Real GDP likely climbed 0.5% in January 2021 as well. Though shutdowns continue to hamper the GTA economy, it’s not hampering GTA homebuyer’s dream of owning a home.

A Democrat government in the US promises to renew free trade which should be a further positive for Canada and Ontario/GTA exports.

The lack of housing supply is making finding a home in the GTA very difficult. It is real estate in Vaughan, Bradford, Newmarket, Aurora, Richmond Hill, Milton, Stouffville, Pickering and Whitby that everyone is after.

Interestingly though, CMHC with its Toronto real estate market crash style scenario. CHMC said Toronto (and Vancouver homes) are highly overvalued and a drop of prices in the neighbourhood of 20% is coming.  With all due respect to CMHC, they should avoid looking at fundamentals, because human market demand is an emotional thing.

With mortgage rates so low, there’s a desperation among young buyers to buy and lock in at low rates.

With Canada’s economy growing (along with the US economic rebound) amidst a stark shortage of homes, it doesn’t make sense that a price drop is coming.  Improving incomes and employment will fuel more demand, and by resuming immigration and vacation travel in Canada, demand would grow further.

Interest rates are forecast to remain low, and as inner-city homeowners sell their homes over the next 6 months, sales are occurring.

Buyers are finding opportunities in small cities outside Toronto and are able to find a way to make the move North, East or West.

Sales have been strong in the Montreal and Vancouver real estate markets as well.  Toronto Home prices in each district/city are updated below, showing the rapid growth in the last 6 months.

My previous forecast of a big increase in Toronto home prices in June, July and August did happen and a further prediction of home prices rising through September, October and November is looking good.  Let’s not forget there are Realtors and journalists calling for a collapse of the Toronto market.

The pent-up demand from April and May is still adding to the new home price inflation however, this is new demand that’s impacting prices and sales numbers. Cities such as Uxbridge, Halton Hills, and Oakville were the big gainers last August. And the trend in the 905 area code continues.

 

With mortgage rates at historic lows and loan refinancing still frequent, the market is loosening up. However, with Covid still actives, US trade tensions heightening, and the US election in two months, we’re hearing more talk about a housing market crash. And a Toronto housing market crash is possible if the US economy should collapse.

As you can see in the monthly Toronto GTA region prices and sales details, upward momentum is strong.  The growth in prices in each regions is astonishing and there is little to suggest it will slow into the fall season.

 

Condo Sales in Toronto Grew in November

December’s community related stats are not available right now due to shutdown issues.  I’ll post the summary when they become available to the public.  Let’s review the November stats by town or district as they are very similar.

It is the migration away from the GTA and the Covid 19 threat that is really weighing on the condo sector. However, as you saw in the TRREB charts earlier, sales and prices are on the rise.   While some are leaving, there is plenty of demand to buy their property.

See more on the Vancouver real estate market, Calgary real estate market, Okanagan real estate market and the York region real estate market.

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Looking Back at CMHC’s Forecast for the Toronto Market

REMAX and the CMHC are in disagreement on the shape of the Toronto real estate market. CMHC is offering a gloomy forecast of up to 14% reduction in home prices. Their argument stems from Canadian debt loads, unemployment and mortgage deferrals.

They’re not fans of the Canadian recovery however buyers should note their warning, that there is a heightened risk this fall. Perhaps not a housing crash but a correction is not out of the question given the turmoil in the US.

CMHC might be stuck with a lot of that debt, so is their forecast might be an attempt to move the market, to soften their own exposure somehow.

Remax calls CMHC recent predictions irresponsible and panic inducing. Remax argument is that although mortgage deferrals (CMHC estimates 20% of mortgage holders by September) and mortgage defaults may rise or hit a peak in a certain month, it will be short lived dip.

Remax points out the shortage of homes for sale and home owners refusal to sell at a big discount.  I think Remax forecast is more reliable, built on sales data which suggests a strong market of buyers. There a lot of people in the GTA who want to buy a home.

CMHC gloomily predicts Canada’s housing market won’t recover till mid 2022 and we won’t reach the depths of the recession until 2021.

So the Toronto real estate forecast has many possible influences and the outcome is more political than financial.

See July’s Toronto home prices below.

But home buyer intent is a key matter. It’s likely that high demand vs low availability will keep the Toronto housing market intense right into 2021.

2021 Canadian Housing Market Forecast

For context for Toronto real estate market against the rest of Canada’s housing markets, is this chart/forecast from TD Bank. They’re predicting a very big return of home sales in 2021, yet moderate price gains for the most part. Toronto’s outlook looks best with a slightly lower price rise.

Screenshot courtesy of TD Bank.

CBA Reports High Number of Mortgage Deferrals

The Canadian Bankers Association reported almost 500,000 requests for mortgage deferrals or to skip a payment were accepted in March throughout Canada. There over 720,000 mortgages deferred up to April 29. That’s almost $1 Billion per month and CBA says the numbers will increase in May and June.

CBA didn’t report the latest mortgage delinquencies. The report shows upswing in the last 2 quarters of 2019 when the economy was good. With a 15% unemployment rate snowballing, we can imagine what the charts look like now. Fortunately, low mortgage rates are aiding in problem and helping homeowners refinance.

DBRS predicts a drop in 10% to 15% for home prices due to Corona Virus. Toronto and Vancouver won’t be exempted and should the Canadian dollar rise as expected, it will weigh on the Ontario economy, pushing unemployment higher and for an extended period. It could be this recession is not yet believed by most Ontarians.

DBRS went on to say the national unemployment rate will decline to 7.5-8.0% by the end of 2021.” That’s 20 months from now.

On the bright side for pre-qualified buyers, is a price slide. All that’s needed is for sellers to list their homes, but April’s listing numbers were as low as they could get.

TRREB reports in the newly released data for April, that sales declined by 2/3rds YoY, and detached home prices dropped 11.2% from March 2020. See the full monthly GTA & Toronto home prices changes below. The trend is typical of all housing market forecasts.

Compare Toronto’s housing market outlook to the US housing market forecast.  You can view the prices for each city and MLS district below. Also, keep an eye on Toronto condo prices as the pandemic passes.

A quick look at the US housing trends and predictions for Los Angeles, San Francisco, Houston, Dallas, Denver, Chicago, Seattle, and Florida, tell you the US is hot. Check out forecasts for Boston, New York, Miami, and San Diego.

Homebuyers are still willing to look beyond the green spaces belt, but they’ll look at Aurora, Bradford, Stouffville, and Newmarket first before heading north.

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