2020 was unprecedented times all around and this held very true for Toronto’s Real Estate market. You could not read the news without headlines on the state of the market and predictions of all sorts. How the market actually behaved was very different from everyone’s predictions and expectations.
We’ve followed the market closely this year and have put together this list of Toronto’s Top 7 Real Estate Stories of 2020.
What did January 2020 look like? Low inventory and high demand in the Toronto housing market created the perfect conditions for prices to skyrocket in early 2020.
Before March, Toronto real estate was already exceptionally strong. January saw the highest monthly price gain in two years (8.7% y-o-y), leading TRREB to declare that the hot GTA market would be a trend buyers and sellers should get used to seeing for the rest of the year.February didn’t disappoint either and then there was mid-March – and we all that exact moment when life as we know it changed forever.
At the start of the year, RBC Senior Economist Robert Hogue predicted double-digit price gains for the Toronto market over the coming months. He was right, but likely not in the way he was expecting at the time.
As the pandemic rapidly spread and its devastating effects on small business and the rest of economy became clear the Bank of Canada was quick to respond even before the first round of lockdowns. By the end of March, the overnight rate was slashed for a third time to 0.25 percent with no sign of an increase on the horizon. These rate cuts brought on historic low interest rates setting the real estate market on fire for the months ahead allowing many first-time homebuyers who may have previously been priced out of the market to now be able to afford a property.
Traditionally the most active market for real estate, sales plunged in the spring as the province declare a stated of emergency on March 17th and went into its first lockdown. Declared an essential service, real estate was allowed to continue its business but it was not business as usual. Open houses were banned, buyers and sellers were sceptical and just generally hesitant to leave their home amongst the health uncertainty as COVID-19 cases climbed.
The lockdown swiftly sent home sales on a downward spiral, with the Toronto Regional Real Estate Board (TRREB) posting a 16% YOY drop in sales during the second half of March. Sales continued to fall throughout April and May, with 67% and 53.7%annual declines recorded during those months.
The market made a strong comeback with record breaking sales in the summer as a result of low mortgage rates and pent-up demand. The big winners were single-family home properties in the 905 region, leading to speculation in the market of a pandemic-inspired abandonment of the downtown, an urban exodus to suburban and rural regions.
With the inevitable adaptation of work-from-home policies, the market saw a shift in homebuyer preferences in location – lower desire to be close to work, space – higher desire to have more space indoors and outdoors as spending time at home became so very important. But backyards and space came at a price tag and saw suburbia explode in prices, demand and number of transactions. While the dynamic originated before the pandemic started, experts have noted that working from home and historically low interest rates have helped to accelerate the trend.
6,730 new condominiums sales took place in Q3, that is a 30% year-over-year increase. Growth was concentrated in the suburbs 905 with 3,8384 units vs. 2.536 unit sales in the City of Toronto 416. New condo sales in the 905 region jumped 106% when compared to the same period a year ago.
By December 2020 average rents in the Greater Toronto Area declined for the 12th straight month due to impacts of COVID-19. Rent prices have dropped 20% in 2020 (good for renters, not so much for small landlords).
This movement in rents in a very strong and competitive downtown Toronto condo market is a direct consequence of the mass spread of COVID-19: Airbnb units flooded the rental market following both travel restrictions and updated city policies. Immigration all but stopped for a quarter of the year, international students were not allowed into the country as borders shut down, and other students were also not looking for a downtown condo for renting or buying. Many renters broke their leases to move back home with their parents in the suburbs and work remotely while others negotiated existing leases to lower rents. may landlords found themselves in difficult situations of accepting lower rents over properties sitting vacant for the coming months.
Hopeful for a recovery in 2021
By December Toronto entered its second lockdown as the country receives its first set of COVID-19 vaccines injecting some confidence and hope for the new year. In addition the federal government also announced new aggressive immigration targets that are expected to supercharge demand in the downtown condo rental market and a slow but very welcomed return to pre-pandemic life.
