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Sunday, January 16

Toronto’s housing market crash signals a return to its pre-pandemic norm, with higher prices

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Once upon a time, the Toronto real estate market moved with the seasons: spring was the hot time to sell; the summer was slow and, traditionally, sales picked up again in September and October. By December, many officers headed south for the winter calm.

The pandemic changed that, bringing the beginning of 2020 to a standstill that spring when businesses closed and people stayed home. The pause added to the already suppressed demand.

After the first crash, the market came back to life, rising month after month until December 2020, when it fell slightly. This year it opened up strong again. In February, the average GTA home or condo sold for over $ 1 million and in May the average sales price peaked at nearly $ 1.12 million on the GTA.

Now, a traditionally slower summer has seen sales contracts and price stagnation, suggesting that the new normal looks a lot like the previous pre-pandemic normal, albeit with higher prices.

Toronto Regional Real Estate Board (TRREB) chief market analyst Jason Mercer expects the pattern to hold.

“In the fall, I would expect to see a rebound in trading over the next month or two and then see things fade again as we move into the winter months,” he said.

But slower sales don’t mean the era of fierce competition and price escalation is over, Mercer warned. Although sales fell month-over-month this summer, there was an even bigger drop in listings.

“In the absence of a significant increase in the supply (of homes), the rental market and the property market should remain tight,” he said.

That competition is particularly brutal on the most sought-after properties: single-family homes and townhouses.

Olga Martchenko, a Right at Home Realty agent, is among those who believe that home sales will move to more normal levels this year. But the lack of supply will continue to be a big influence on prices, he said.

A home that listed in the Royal York Road and Eglinton Avenue area for $ 999,900 sold this week for more than $ 1.5 million in a bidding war that drew 40 registered offers.

Young families wanting to move from small condos to ground-level housing are generating that kind of interest, he said.

“The location was fantastic, (it was a) single-family house in its original form, but a fantastic lot,” Martchenko said.

She expects this year’s double-digit year-on-year price gains to ease to a more modest pace next year.

The Star asked Mercer and five Toronto agents what they expect to see in the market this fall. This is what they had to say:

Prices may not go up, but they probably won’t go down

Price growth traditionally slows in the fall, Mercer said. That doesn’t mean that prices will necessarily go down, it’s just that they probably won’t go up as dramatically as the first part of the year.

This winter and spring saw an extraordinary escalation in house prices. With the exception of July, when the average home sold for .11 percent less than last year, each month it has seen a double-digit gain year-over-year. In May, Toronto-area home prices hit a record $ 1.11 million on average, including all types of homes and condos. At the end of August, the average was about $ 37,000 lower.

In June, the real estate board adjusted its year-end forecast upward from $ 1.025 million to $ 1.07 million. Although the first part of the year played a major role in driving the average higher, Mercer notes that the average August sales price was in fact $ 1.07 million.

Realosophy data-tracking founder John Pasalis says his instincts tell him that the market should be a little cooler in the fall, but it will still be a seller’s market. The shortage of listings means that buyers will still face stiff competition, especially for homes just below or above the $ 1 million mark that attracts many buyers.

“I don’t see anything that is going to make prices drop anytime soon. Active freehold home listings in Toronto is 4,700, which is ridiculously low. Historically there were probably 11,000 houses for sale, ”he said.

The outlook for the suburbs and suburbs is less than clear

Sandra Sheffield of Royal LePage believes that there is staying power in the work-from-home spirit that has led many families to move out of town. Throughout the pandemic, home prices in 905 have risen faster than in the city of Toronto, as buyers seek more for their money.

“I don’t see that we’re going 100 percent back to the office in person and we’re not done with COVID. A year ago we were talking about a second and third wave. I don’t think any of us expected to be talking about a fourth wave, ”he said.

“People have become less concerned about accessing the TTC. Now they want home offices and they want closed spaces, rooms with doors that they can retreat to, ”he said.

Tracy Nursall, a Keller Williams realtor in Oakville, blames COVID-19 for dissuading people from listing their homes. Many people, she said, are still nervous about leaving their homes or having people inside.

But open houses have resumed and officers are used to COVID-19 protocols on home tours.

“Some people went from the GTA to other communities. Smaller communities like Tottenham (over an hour north of Toronto) and those little places became more popular, ”he said.

It remains to be seen if the suburbs are still hot, Pasalis said.

“They have gone up a lot. In the past, people left the city to get a bigger and nicer house, but the suburbs have gone up a lot (in price). What you get for the price of your semi downtown is not that convincing at the moment when you look at what you can get in the suburbs for the same money. That’s because suburban home prices went up more than 30 percent, while Toronto was up 10 percent, ”he said.

Condo sales are back

Condos.ca’s Andrew Harrild doesn’t expect the next two to three months of condo sales to come close to the hectic pace of the first half of this year.

But, he said, “there are certainly more announcements since Labor Day. He’s going to be busy if the last few weeks are anything to go through. “

Harrild mentioned more traffic, units selling faster, and sale dates reappearing on condo listings.

Although there is a trend for people to move further into the GTA, there is still demand for housing in the center, he said.

“We are starting to see condo buyers. Everyone is adapted to the reality that we could be living in this pandemic for some time; they have to make the space work, ”said Harrild. “You want that outdoor space if you can get it. Couples are looking for truly functional floor plans. They will stretch out to try and get that second bedroom or living room so they don’t end up killing each other in the event of another lockdown. “

The condo market was flooded with supply in the early part of the pandemic, with younger workers leaving town, families seeking more space, and new Airbnb regulations. But Mercer notes that last month, condo prices had risen 9.4 percent year-on-year and sales were up 11 percent.

“It was that side of the low-rise market that got things going, but now the condo market is catching up,” he said.

The high cost of homes is fueling the condo market, Pasalis said.

“Many younger buyers are finding it easy to buy a home and are looking for a reasonable two-bedroom condo that they can settle in for the long term, an 800-square-foot unit that they can live in for five years.” he said.

Despite the cost, young families continue to buy

One of the reasons condos have made a comeback this year is because first-time buyers are still buying homes, Mercer said.

The real estate board’s Ipsos survey late last year indicated that 40 percent of those who intend to buy this year would be first-time buyers.

“The average home buying a home actually has more flexibility in their household finances than they are sometimes given credit for,” he said.

COVID-19 has helped many households reinforce their savings, the money they have invested in buying or renovating homes, Sheffield said.

As COVID-19 recedes, Mercer said it will look at the extent to which people start spending on other consumer goods.

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Reference-www.thestar.com

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