The market stays hot in July! COVID-19 had many people waiting on the sidelines in the first half of the year, but that lull has passed and the buyers have returned in full force. July 2020 brought an increase in Sales of 29.5% year-over-year, and a new record for the month of July. New Listings increased annually at a rate of 24.7%, meaning the demand for housing continues to outweigh the supply. This imbalance creates tighter market conditions, a resurgence in bidding wars and increased prices. Sales activity was very strong in June and even stronger in July. Typically, the Summer market dips between the Spring and Fall, but 2020 is a year like no other. Aside from the pent-up demand from those already planning a move this year, the lockdown likely created a new pool of buyers from those now wanting to change their living space. Travel restrictions also likely contributed to an increase in activity this Summer with would-be vacationers now active in the market.
The Toronto Regional Real Estate Board reported an overall average selling price increase by 16.9% year-over-year to $943,710. This growth was driven by low-rise home types, particularly in the regions outside of Toronto, most notably in Orangeville (13.9%), Durham (12.27%) and South Simcoe (14.12%). Condominium apartment sales were also up on an annual basis, including in Toronto. The growth was led by detached houses which had a 25.5% price gain in the city of Toronto to an average of $1.54 million. In the 905 area code, detached homes were selling for 14% higher than last July with an average price of $1.06 million.
It's very hard to predict the future of this market. The current rate of price increases does not seem sustainable, but the biggest driver of pricing in an open market is supply and demand. With so many buyers vying for the same home, the highest offer typically wins the bidding war, and sets the bar for the next comparable home to hit the market. If that new home also sells significantly over asking, the trend continues and prices keep escalating. The only true way to address this is to increase the supply of housing, but this is much easier said than done. The missing middle market (condos, townhouses and semis) are in the greatest need as it is incredibly difficult for first-time buyers to enter the market.
The 2020 real estate market has been very interesting to follow so far. There are so many factors, globally and locally, that could contribute to a change in the current trend, but it is next to impossible to predict. Stay tuned!