Yahoo Finance Toronto area home prices hit new all-time high during COVID-19
Even the COVID-19 pandemic hasn’t been able to stop The Greater Toronto Area’s (GTA) real estate market from reaching a new all-time high.
The Toronto Regional Real Estate Board (TREBB) says the average price of a home in June was $930,869 – up 11.9 per cent compared to June 2019. Compared to May 2020, it was 7.8 per cent higher.
The previous record was reached in April 2017, peaking at $920,791 before stricter rules for mortgages and foreign buyers temporarily cooled things down.
Prices were higher across all housing types, but detached (up 14 per cent) and semi-detached (22 per cent) led the way.
“Following the broader movement to reopen the economy in June, we experienced a very positive result in terms of home sales and selling prices,” said TRREB president Lisa Patel, in a release.
“Before the onset of COVID-19, there was a great deal of pent-up demand in the market. This pent-up demand arguably increased further over the past three months.”
Scott Ingram, a chartered accountant and sales representative with Century 21 Regal Realty, agrees with Patel’s assessment.
“A bunch of buyers that were planning on buying through March/April/May hit the pause button (as did sellers planning on listing). So now once things have started to open up again, people are anxious to resume their lives and go out and get back to some sense of normalcy,” Ingram told Yahoo Finance Canada.
“People are feeling more confident venturing out in public again and that's included looking at properties available for sale.”
Ingram says the market is competitive because buyers and sellers have returned in similar proportions and says the return of expensive properties has helped push the average price to a new all-time high.
Moving to the burbs
Sales were up 89 per cent compared to May 2020, but 1.4 per cent lower than June 2019. Supply is tighter than last year though, because active listings were down 28.8 per cent.
The sales data point to a shift into the suburbs, with a 4.1 per cent increase in the ‘905’ area code while the ‘416’ area code saw a 11.2 per cent decline.
“It appears there has been a shift from ‘416’ to ‘905’. Last June 63.9 per cent of TRREB sales were in the ‘905’,” said Ingram.
“Last month 67.5 per cent of TRREB sales were in the ‘905’. That has ramped up since 65.4 per cent in March. If the percentages don't sound high, based on last month's 8,701 transactions, it means 311 more people went ‘905’ than they would have at last year's rate.”
COVID-19 has led to a surge in people working from home, so the trend could account for the shift. But Ingram has cautious words for people planning to sell their downtown home and move to the suburbs.
“It makes sense to move if you're a renter and want some breathing room and to save some money,” said Ingram.
“But does it make sense to sell your 416 home and incur the transaction costs to buy in the suburbs when things may go ‘back to normal’ (or close) in a year? I know I'm not worried about the future of central Toronto - there will always be demand as the population grows.”
TREBB says it expects prices and sales to continue to ramp up through 2020 barring a resurgence of COVID-19 in Canada as well as in the U.S., which would negatively affect trade, employment, and household wealth through equity markets.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
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