Toronto real estate prices hit a record high for the third consecutive month.
The average price of homes in the GTA rose to $ 951,404 in August, according to the Toronto Regional Real Estate Board (TRREB). That’s a 20.1% increase. 100 year over year. The average home price in August for the city of Toronto was $ 1,012,506, up 24% year over year.
“Competition among buyers was particularly strong for low-rise home types,” said Jason Mercer, chief market analyst for TRREB in a statement. He adds that these houses are largely responsible for the price growth.
The average price of single-detached homes in the city can reach $ 1,505,100, an increase of 21.4% year over year. Matches increased even more, rising 21.9% to $ 1,166,226. Condo prices rose 8.7% to reach $ 673,174.
Sales in August were up 40.3 percent year over year. The unusually high number of transactions – 10,775 – is the result of pent-up demand after the COVID-19 pandemic shut down the market in the spring.
Broker WE Realty Odeen Eccleston adds that the ability to host open houses added to the frenzy of August again. She explains that the demand for properties under $ 1 million is particularly intense, as buyers do not need to make a 20% down payment for those purchases.
Falling real estate in Toronto?
Market watchers have anticipated a potential drop in Toronto property prices from September.
The spring forecast from the Canada Mortgage Corporation estimated that the average price of homes in Toronto could drop starting this month. The reasons include the lack of immigration, the impact of COVID-19 on the economy, and the end of aid programs like CERB.
Toronto real estate brokers also expected more home listings to flood the market as mortgage deferrals expire in September. Now they are not so sure the decline will come.
“The inventory is still under control,” says Meray Mansour, real estate agent at Re / Max Hallmark Realty. “The demand is still there.”
Mansour doesn’t count the possibility of a decline because there are still so many variables at play. She says we can’t measure the number of people who have problems or businesses that have gone bankrupt. We also cannot measure the number of people with safety nets like basement apartment rental income that helps withstand any impact from COVID-19.
Eccleston and Mansour believe the Toronto real estate market in particular can withstand the worst of expectations. Eccleston imagines a dramatic scenario where 10 percent of Canadian mortgage holders can no longer carry forward and list their homes.
“The point is, in the city of Toronto and the surrounding neighborhoods, we could use 10 percent more inventory,” Eccleston says. “Maybe that will temper the bidding wars a bit. I just don’t see the prices dropping dramatically. The bottom line is that these real estate investments mean so much to our people. And no one tries to settle for less unless they absolutely need it. “
Mansour notes that the condo market is inundated with inventory. She acknowledges that the downward pressure on condominium prices could potentially affect low-rise home prices. This would only happen if large volumes of buyers whose home price was exhausted began to settle for condos. Such behavior has caused fluctuations in the past. But Mansour adds that trying to predict this kind of human behavior is futile. Home buyers don’t necessarily follow logic.
“When prices go down, buyers don’t tend to jump on them,” Mansour says. “They tend to sit down. It is a good time to buy, but they are afraid because the market has fallen. But every time the market goes crazy, the buyers are like, “Oh my god. Let’s buy something before there’s nothing left! It’s a strange psychological thing that we have as humans.
Real estate agents have also noticed that working from home due to the COVID-19 pandemic has inspired an exodus.
People are moving to the suburbs or leaving the Greater Toronto Area altogether for more affordable, greener, and more spacious homes.
Eccleston cautions patrons to be careful with these decisions as we don’t know when social behavior will once again head to town. She suggests trying a short-term rental in the country first. Especially because if someone leaves town, there’s a good chance they won’t be able to afford to come back in a few years.
“You don’t want to be stuck with post-pandemic real estate regret.”