We thought the June numbers indicated a hot market... but that was before we saw July's blazing hot housing stats. July saw 11,081 sales (well over the 8,555 properties sold in July 2019), at 29.5% increase and a new sales record for July. The average price was $943,710, compared to the last average of $806,971. However, if you’re a condo buyer or seller, there’s one key thing to keep in mind: that growth has been driven mostly by detached sales: growth in the condo sector has been minimal.
Related info: Mississauga market reports and York region market reports
Major growth in detached homes
Freehold homes in the 416 led the way with massive year-over-year gains of 25.5%. The number of new listings is up year-over-year as well: 24.7% higher than this time in 2019. But while you'd think that more supply would mean less competition and lower prices, that's definitely not the case right now, at least not in the detached market. Sales outpaced supply, with buyers chomping at the bit to get their hands on Toronto properties. And as always, when demand is greater than supply, prices go up.
Condos aren’t seeing the same kind of action
Condos in the core saw minimal gains, with an average price gain of 8.8% year-over-year. But if you look at average price per square foot, condos only went up by 2.8% - growth that's almost flat compared to last year.
3 reasons why the market is hot
Despite minimal growth in condos, the market is doing incredibly well, especially considering the economic uncertainty we’re facing thanks to COVID. But the reasons we’re facing that uncertainty are also, ironically, why the market is doing so well…
1. There’s a lot of pent-up demand.
We basically didn't have a spring market this year because everything was shut down. Everything got pushed by a couple of months, and add up everyone who would have bought in the spring PLUS those who would have bought in July without a pandemic, and you’ve got almost double the demand. That won't last forever though – as everyone who was waiting, buys a home, it will naturally decrease.
2. People aren’t leaving the city.
July is usually the time of year people head out of Dodge for lakes and oceans and changes of scenery. But that's not happening much this year, for obvious reasons. Which means folks are available to house hunt all summer long, so they aren't waiting for the fall or the spring.
3. Borrowing is dirt cheap.
Rock-bottom interest rates make home ownership more affordable. And while it's harder to qualify for a mortgage these days, if you do, current interest rates are a pretty great deal.
But as the COVID situation changes, the market could too. Pent-up demand will ease. Inventory is likely to increase – especially when mortgage deferrals, CERB and other economic supports come to an end and people facing financial hardship are forced to sell (or are unable to enter the market in the first place). However, there are two other factors that could help balance things out: interest rates staying low and immigration ramping back up could keep the market strong.
In the meantime, it looks like the hot market will continue well into the fall, and possibly beyond, depending how the situation evolves.
About Ryan Wykes, SVP of Sales
Ryan is a top performer, dedicated leader and mentor, and a gifted negotiator with a thorough understanding of business and marketing, especially in the Toronto real estate market. He’s been with condos.ca since 2012. Get in touch with Ryan today.