December is normally a slower time in the residential real estate market however it is almost like the holiday season did not exist during these extraordinary times. December’s residential marketplace in the Toronto and surrounding area was unusually robust and dramatically exceeded historic norms. It topped a year off that has been full of surprises.
Despite the abrupt drop-off in housing demand this past spring due to COVID-19 public health restrictions and uncertainty surrounding the economy, real estate activity soared to record-breaking levels throughout the summer and fall to cap off what’s now become the third-best year on record for home sales in the Greater Toronto Area (GTA).
The Toronto Regional Real Estate Board (TRREB) reported 95,151 home sales in 2020 for the GTA. This is an increase of 8.9 per cent compared to 2019. An extraordinary result! The average selling price for all homes sold reached a new record of almost $930,00 for the GTA, an increase of 8.5 per cent compared to 2019.
While the GTA housing market followed an “unfamiliar path in 2020” in light of the pandemic, Lisa Patel, TRREB President, says housing market recovery was fuelled and sustained by the “strong economic rebound in many sectors of the economy, ultra-low borrowing costs, and the enhanced use of technology for virtual open houses and showings.”
The work from home trend with COVID-19 did however affect the type of properties in demand with the single-family home including detached, semi-detached and townhouses led the way. Coupled with buyers were looking for green space, the GTA regions surrounding Toronto had the strongest year-over-year sales growth, particularly for the single-family home types.
The month of December posted a record result of 7,180 homes sold in the GTA which is an impressive 64.5 per cent increase over 2019 sales when 4,364 homes exchanged hands. It is not surprising with this surge in sales we saw a rise in the average sale price. On a year-over-year basis, the average sale price for all properties sold in the GTA increased 11.2 per cent to 932,222 in December 2020 from $838,662 last December.
According to the December report, detached home prices rose 17.7 per cent year-over-year to an average of $1,240,632 in the GTA. The 905 communities surrounding the 416-area saw the most significant increase of 22.7 per cent to $1,175,753, compared to an 8.1 per cent increase in the City of Toronto, which reached an average of $1,475,758.
Sales of detached homes were also up 54.6 per cent year-over-year across the GTA in December: 58.5 per cent in the 905 areas and 41.9 per cent in the City of Toronto, while sales of semi-detached homes in the GTA were up 56.8%: 56.3 per cent in the 905 and 57.6 per cent in the City of Toronto.
Townhouse sales in the GTA were also up by 76.8 per cent compared to 2019, with the 905 recording a year-over-year increase of 82.3 per cent and Toronto seeing 60.9 per cent growth.
The luxury segment of the market, defined as homes over $3 million set new records during the pandemic too. More than 1,000 properties over the $3 million mark changed hands last year, an increase of 55.7 per cent from 2019 (1,062 versus 682) while edging up 1 per cent ahead of the previous record set in 2017 (1,062 versus 1,047). And the number of homes sold over $4 million climbed 53.4 per cent year-to-date (379 versus 247), while sales over $5 million appreciated 44 per cent to 180 in the GTA, up from 125 in 2019.
In December alone, 287 properties having a sale price of $2 million or more were reported sold. That compares with only 125 last year, an increase of 130 percent. Not surprising, more than 90 percent of those properties were detached single-family homes in the 416 and 905 regions.
“However, while the housing market as a whole recovered strongly in 2020, there was a dichotomy between the single-family market segments and the condominium apartment segment. The supply of single-family homes remained constrained resulting in strong competition between buyers and double-digit price increases. In contrast, growth in condo listings far-outstripped growth in sales. Increased choice for condo buyers ultimately led to more bargaining power and a year-over-year dip in average condo selling prices during the last few months of the year,” commented Jason Mercer, TRREB Chief Market Analyst.
The condo sector in 2020 also saw the greatest price gains in the 905 communities, rising 10.2 per cent last year to $532,300 on average, compared to a 6.3 per cent increase in the City of Toronto to $673,869. Condo sales were down across the region though by 5.5 per cent last year, including a 6.7 per cent drop in Toronto.
Having said that, December saw Toronto’s condo market activity soar to new heights. The sector — hardest hit by COVID-19’s fallout saw 2,193 sales in the GTA, making up 30.5 per cent of the month’s total sales and, most notably, marking a 75.4 per cent jump over the same month in 2019.
In the 416 region, there was no corresponding increase in average sale prices. In fact, quite the opposite with the average sale prices declining by 4.7 per cent in the City. In Toronto’s central core, where most of the City’s apartment projects are located the decline was even greater. Prices fell by almost 10 percent, from $733,000 in December 2019 to $669,000 this year. Central core condominium apartment sales accounted for almost 67 percent of the city of Toronto’s total condominium apartment sales. While 905 area units sold for an average of 6.3 per cent more year over year.
Time will tell if December’s condominium apartment sales were a market anomaly. This surge may largely be driven by demand from investors who are taking advantage of the lower prices or first-time buyers. With prices down from their peak by almost 10 per cent, and the low mortgage rates, investors may be seeing this as an attractive opportunity. It may be that the more affordable prices have overcome buyer’s need for space and safety. This phenomenon might also be driven by the fact that prices in the 905 region have risen to prohibitive levels.
Overall, it was quite a year. The increase in condominium apartment sales at lower average sale prices shifted the variance between average sale prices overall between the City and the surrounding regions. Prior to December the average sale price of all homes sold in the 905 areas was always less than the City. In December 2020, the average sale price for the surrounding GTA came in at $955,086 and in the City of Toronto at $894,000. This is a result of the significant rise of condominium apartment sales at sharply falling values.
Looking ahead, John DiMichele, TRREB CEO, says “the next 12 months will be critical as we chart our path through recovery. In particular, the impact of resumption in immigration and the re-opening of the economy will be key.”