real estate

Toronto Housing Market Predictions

Toronto Housing Market Update & Forecast

August was yet another strange month for the Toronto real estate market. It was the 3rd best sales month during August on record, yet listings have plummeted further and prices are even higher. See August’s stats below.

It seems buyers will stop at nothing to own a home when one becomes available. TRREB’s August market watch report shows more double digit price growth. The average selling price for all home types rose 12.6% year-over-year to $1,070,911.

Typically August sees home sales cool from the hot spring and summer period, but last August sales hit records and this August the market is abnormally busy. The pandemic effect continues as buyers lust for single detached homes to stay safe and work at home. Growing population, reopening business, a Federal Election, and increased immigration, and continued low interest rates make our Toronto housing forecast easy — higher prices and lower supply.

TRREB reports 8,596 sales via the MLS during August 2021, which is down by 19.9% from last August record sales total of 10,738 units. The Toronto condo market too, surged in sales and rose in price even as listing dried up by 43% year over year.

TRREB President Kevin Crigger reiterated in the August housing sales report that the provincial and federal governments must come to the table to ease the housing crisis.

House buyers and home sellers alike are wondering when the home price madness will end. With the pandemic continuing, immigration pending, and family starting millennials getting a year older, the pressure keeps mounting.

During this election run, the Federal party candidates are touting housing policies, yet this price run has been happening for 12 years so we can’t take promises too seriously. Odds are, that Toronto house and prices and condo prices will rise further, and by spring of 2022, could be utterly out of control.

TREBB’s Jason Mercer added too, “There has been no relief on the supply side for home buyers, in fact, competition between these buyers have increased. As we move toward 2022, expect market conditions to become tighter as population growth in the GTA starts to trend back to pre-COVID levels.”

In late winter, I forecasted that new listings across the GTA would eventually drop and that’s exactly what’s happened. A lull in interest in Toronto real estate is growing as the pandemic has continued, prices have grown and fewer homeowners look to sell. It’s creating pessimism, burnout, and without sufficient supply of good quality homes for sale, sales have dropped. Much too pricey for Millennials. See the home prices below. Although we’re used to these ridiculous prices, they’re set to rise further and generate significant harm to the economy.

It’s the usual situation with the housing market in Toronto where government suppression of housing development has caused home prices to keep rising at a ridiculous pace. Now that immigration has restarted and workers are being called back to their employer’s workplaces, prices could rise again. Houses in Toronto are non-existent and condos on the other hand are seeing strong growth. It’s the same in any housing market in North America.

According to Knight Frank’s Q2 global housing report, Toronto has the fastest rise in home prices. The 12 month change was a whopping 27%.  What do you suppose is so unique to this city that is driving such steep rises?

The average price for all home types combined was $1,062,256 – up 12.6% vs 12 months ago while prices for single detached houses hit $1,405,478.

See the detailed price chart for Toronto districts below.

This strong upward pressure on home prices will be sustained in the absence of more supply, especially as we see a resurgence in population growth moving into 2022,” said TRREB Chief Market Analyst Jason Mercer.

It’s almost certain that without an easing of NIMBY housing regulations that prices will continue rising higher and out of the reach of buyers. Economists believe interest rates will rise in late 2022 and early 2023. On the whole, they believe inflation is about to get out of hand. Demand in the US will spill over to Canadian consumer prices and housing prices and gasoline prices are just a small component of the upward trend.

I’ve suggested or forecast that a housing market crash is imminent in early 2023 as everyone reacts emotionally to rising interest rates. The rates have to rise to battle out of control inflation. Even Canada has spent hundreds of billions added to the US $3 to $8 Trillion spending plan. The US is in big trouble in that they will have to raise interest rate to control inflation.  Experts feel they have no other tools to fight inflation.  With out of control immigration at the southern border, there is even more demand for non-existent affordable housing.  Canadian immigration could follow suit.

As production hasn’t ramped up due to shortages, inflation has to happen. Immigration will add to it as immigrants march in next year.

The Toronto condo segment has recovered well and is expected to continue given the shortage of units, the demand from new immigrants, returning workers to the high density housing in 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. If you’re in need of selling your house fast, see the report on iBuyers and how to sell your home fast.

New charts are not available as yet, but take a look at June’s charts for reference.

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 Stats – report for August in GTA. Screenshot courtesy of TRREB.

GTA 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 predicted higher home prices this summer as expert believe in miracle intervention, but none is coming.  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 downtown Toronto condo.

Toronto Housing Prices

King, Markham, Brampton, Toronto Central, King, Whitchurch/Stouffville saw big gains in house prices while Bradford, Brock, Innisfil, Milton, Halton Hills, and Burlington suffered sizable losses in price.  It seems buyers cannot find the houses they’re hoping for far from the city, or they are having issues about the commute to Toronto to work.e on  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.

Take a look at the home price rises of the last 4 years. This is the shocking stat that most buyers and politicians have lost site of. This really is an election issue, as we head to even higher prices and less housing supply in the GTA. GTA housing stats courtesy of TRREB.

Detached Home Prices in GTA TREB 2021
Toronto Region Cities August 2021 July 2021 August 2020 August 2017 Price Change last 12 Months Price Change Last 4 years
Burlington $1,403,929 $1,365,547 $1,184,945 $944,564 18.5% 49%
Halton Hills $1,211,651 $1,178,832 $1,046,213 $984,812 15.8% 23%
Milton $1,308,519 $1,285,132 $1,044,360 $866,650 25.3% 51%
Oakville $1,958,639 $1,920,531 $1,582,531 $1,314,363 23.8% 49%
Brampton $1,275,119 $1,214,841 $989,039 $766,831 28.9% 66%
Caledon $1,673,455 $1,660,778 $1,185,251 $1,028,591 41.2% 63%
Mississauga $1,483,197 $1,551,658 $1,307,832 $1,066,015 13.4% 39%
Toronto West $1,457,430 $1,382,361 $1,270,053 $919,916 14.8% 58%
Toronto Central $2,419,594 $2,542,478 $2,385,278 $2,113,130 1.4% 15%
Toronto East $1,278,893 $1,242,729 $1,118,506 $887,620 14.3% 44%
Aurora $1,458,249 $1,535,884 $1,259,424 $1,144,094 15.8% 27%
E Gwillimbury $1,341,007 $1,425,091 $1,023,943 $966,047 31.0% 39%
Georgina $965,273 $943,194 $731,183 $604,838 32.0% 60%
King $2,280,737 $2,127,595 $1,774,480 $1,768,333 28.5% 29%
Markham $1,700,951 $1,710,577 $1,465,417 $1,319,860 16.1% 29%
Newmarket $1,271,443 $1,223,591 $1,050,862 $901,055 21.0% 41%
Richmond Hill $1,821,529 $1,834,311 $1,563,718 $1,466,884 16.5% 24%
Vaughan $1,813,728 $1,633,544 $1,389,040 $1,348,649 30.6% 34%
Whitchurch Stouffville $1,579,708 $1,669,468 $1,219,385 $1,024,941 29.5% 54%
Ajax $1,100,626 $1,052,753 $862,454 $708,185 27.6% 55%
Brock $987,354 $764,293 $660,183 $508,615 49.6% 94%
Oshawa $862,358 $882,096 $672,522 $550,677 28.2% 57%
Pickering $1,263,994 $1,217,165 $973,291 $812,643 29.9% 56%
Scugog $1,047,595 $988,223 $919,542 $719,375 13.9% 46%
Uxbridge $1,403,310 $1,435,744 $1,089,997 $792,233 28.7% 77%
Whitby $1,101,460 $1,089,938 $886,322 $733,811 24.3% 50%
Orangeville $958,823 $853,674 $705,254 $612,974 36.0% 56%
Bradford West Gwill $1,166,483 $1,155,989 $874,168 33.4%
Innisfil $931,421 $890,940 $766,834 $549,492 21.5% 70%

City of Toronto condo Prices

City of Toronto Condo Prices. August 2021. TRREB market report. Screenshot courtesy of TRREB

GTA Towns and Cities Condo Prices and Sales

Screenshot courtesy of TRREB.

TRREB’s 2021 Market Forecast

MLS home sales expected for 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?

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.

Year over year condo sales growth. Toronto real estate market. 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 in August and into the fall.  As the economy slowly recovers, sellers will be reluctant to sell and buyers won’t like the available stock.

TRREB Chief Market Analyst Jason Mercer added in June’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.

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.

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 market 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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