2020 is off to an incredibly strong start and is only showing signs of picking up more. In the first few weeks of the year alone, condo prices in the GTA shot up 15%, setting the stage for a year like 2016, with prices hitting highs the city hasn’t seen before.
In 2019, we saw Toronto sales jump by close to 20% year-over-year, but the inventory – the actual number of available listings – dropped by 2-3%. That low supply/high demand scenario has set the stage for ever-increasing prices in 2020, as buyers bid more and more to land the properties they want.
What’s driving this incredibly strong market?
People are getting off the sidelines. A lot of potential buyers have been in “wait and see” mode, thinking there might be a recession and prices would drop. Others had their buying power cut by the stress test, and held off, hoping things would change. But there hasn’t been a recession, and the stress test hasn’t gone away, so they’re now realizing they need to change their expectations around what they’re able to buy. At this point, it’s not about getting their “dream home” right now, but about getting into the market before they can’t afford anything.
Rental prices are going up. Whether you rent or buy in the city, living here is expensive. And great rental properties are few and far between. So a lot of people are figuring they might as well own if they can.
170,000 people a year are moving to Toronto. A lot of the immigrants who come to Canada settle in the city. It’s not a surprise – this is where their communities have become established, and it’s where the jobs are. And as Canada moves towards accepting more immigrants, these numbers are only going to go up.
Big companies are moving into the city. Google is building their city here, Facebook is planning their headquarters, and other big tech companies are seeing the value of having a presence in Toronto. More and more high-level, high-paying jobs are coming into the city as a result, making it an even more attractive place to live.
Multiple offers drive up prices. These days, it’s not unusual to see 20 to 30 offers on a single condo in the downtown core. The winning price for that unit then resets the market – and leaves 19-29 buyers still looking for a home. So with each winning bid, prices go up.
What does that mean for you?
If you’re a first-time buyer, buy now – whatever you can afford. If you wait, you may be completely priced out of the market. Also, be prepared to lower your expectations. You may have to drop down to a studio from that one-bedroom plus den, or buy in a neighbourhood that isn’t your first pick. But if it’s your only way into the market, it’s better than waiting, because this way you build the equity you need to move into that dream home down the road.
If you’re a seller, you’re in luck. It’s a seller’s market out there. Just remember that if you’re selling in Toronto with the plan of either upgrading or downsizing in the city, you’ll be facing the same inventory shortage as everyone else. Your current home will only appreciate in value if you wait – but so will that smaller condo you’ve been eyeing for retirement, or that cute 3-bedroom townhouse with the big backyard.
Want to know more about the market – and what to expect if you’re buying or selling? Give us a call – a Condo Pro can help you figure out the best way (and the best place and time) to buy.
About Ryan Wykes, SVP 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.