Toronto Housing Market Forecast
Toronto home and condo sales soared again during February. Yes, more record high prices, detached housing shortages, bidding wars, and stories of garages on small lots being purchased for $800,000.
The Toronto housing market is desperate, squeezed, and grossly overpriced. And while Toronto home prices rocket, house prices outside the city are climbing even faster. That’s because the work from home era is allowing buyers to hunt for any homes available north, east and west. First time buyers and the fear of missing out people are adding pressure on prices.
Without further adieu, here are the February sales resale MLS housing stats:
Demand for low-rise condominiums, attached and detached houses hit a fever pitch in February. March is shaping up to produce all-time highs in prices all round. The average prices of a house in the GTA rose 23% year over year to hit C$1,371,791 while the average price for a townhouse reached C$858,025. (+17% YoY).
TRREB hasn’t released its detailed sales report for all districts unfortunately, however we certainly appreciate their effort to let us know the pulse of the market.
While the Covid 19 threat lingers, buyers are buying condos, yet sellers are dumping them onto the market. 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.
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.
Average Toronto Home Price in January
Homes for Sale Toronto
Listings of homes in the GTA rose strongly both vs December, and January 2020. With sellers finally hitting their price targets to sell and with mortgage rates beginning to rise, they feel this spring will be the time to unload their properties. Days on market are 10% less than last year and are down 11% from December. The pace is quickening.
Sales to Listings ratio in December was extremely elevated and without a fresh flow of new and used homes available in March, April and May, we could see bidding wars across the GTA, and pushing up into the Newmarket, Barrie and Orangeville areas.
Expectations and predictions are for much higher prices in 2021, as the pandemic begins to pass. The demand by cash-rich buyers is for more roomy accommodations outside the 416 area code. The only year over year drop was for condos in the 416 area code, and average price fell 4.7% there.
“The next 12 months will be critical as we chart our path through recovery. In particular, the impact of
resumption in immigration and the re-opening of the economy will be key.” said TRREB CEO John DiMichele.
In the third quarter comparison of Q3 2020 compared to Q3 2020, condo sales rose 10.5% and condo apartment prices to rise 8.3% to a new lofty average of $633,484. Although the pandemic hit the Toronto condo market, the damage hasn’t been too bad. It sets the table for a much rosier Toronto condo forecast for 2nd half of 2021.
Total condo rentals grew by 30% while total new listings grew 114% to Q3 2020 from Q3 2019.
Toronto Home Price Timeline History Chart
The Sales to listing ratio reflects the surging home sales while prices appear to be softening as more stock is put up for sale.
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.
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.
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.
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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.
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.
Toronto Home Prices 2021
|Detached Home Prices in GTA TREB 2021|
|Toronto Region Cities||January 2021||November 2020||August 2020||July 2018||Price Change last 3 Months||Price Change Last 32 Months|
|Bradford West Gwill||$1,017,840||$972,286||$874,168||4.7%|
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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.
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