Home-buying frenzy will continue
Average GTA home price to surpass $1 million
The average price of a resale home in the Toronto area is expected to climb 10 per cent this year over last, eclipsing the $1-million mark for the first time, the Toronto Region Real Estate Board (TRREB) predicts.
That increase would bring the average home price across all housing categories, including condominiums, to $1.025 million, according to TRREB’s Market Year in Review & Outlook 2021 Report. And with market conditions for low-rise homes expected to remain very tight as sales rise at a faster pace than listings, bidding wars are likely to continue.
“The pandemic certainly resulted in an unprecedented year for real estate in 2020 but it hasn’t put a damper on the overall demand,” says TRREB chief market analyst Jason Mercer. “Looking ahead, a strengthening economy and renewed (Greater Toronto Area) population growth following widespread vaccinations will support the continued demand for both ownership and rental housing. But over the long run, the supply of listings will remain an issue, particularly in low-rise segments.”
TRREB is calling on various levels of government to expedite the creation of missing middle housing – which is identified as multi-unit, low-rise housing between detached and mid- to high-rises – through rezoning to help address lack of supply.
Last year’s real estate market saw unpredictable ups and downs, including consecutive monthly records for home sales and average sales prices in the second half. The final tally? The third best annual sales total on record and a new record for the average selling price. The suburbs experienced the strongest sales growth, especially in single-family homes with an average selling price of nearly $930,000.
This year is already off to a strong start, with January home sales totalling nearly 7,000 – up more than 50 per cent year over year – and the average selling price up 15.5 per cent to $967,885, TRREB reports.
The COVID-19 pandemic has acted as an “accelerant” for homebuyers, drawing them into the market sooner than expected and influencing where they bought, Ipsos vice-president Sean Simpson reports. “There’s no reason to believe the foot is going to be taken off the gas pedal in the year ahead,” he says.
According to the Ipsos Home Buying Survey of Greater Toronto Area consumers on their home-buying intentions in 2021, 30 per cent are likely to purchase a home to live in over the next year – up one per cent from 2019 and 2018. Of those likely buyers, 41 per cent are first-time buyers, which is on par with last year’s proportion but down nine points from a few years ago.
“That’s likely a function of affordability. It’s not that they don’t want to be active, but prices may be limiting the ability of some to get into the market,” Simpson says. First-time homebuyer intentions are strongest in Peel Region and Toronto, at 45 per cent and 44 per cent respectively. Those areas have significant concentrations of condominium apartments – often the entry point for first-time buyers.
Over the course of 2020, growth in condominium apartment listings far outstripped growth in sales. The condominium apartment market segment experienced the slowest average pace of average price growth at 7.1 per cent. But with immigration and non-permanent residents expected to reach record levels once the pandemic has subsided, TRREB predicts demand for both condo ownership and rentals “will pick up substantially” and help absorb any excess inventory of units available for sale.
In the early days of the COVID-19 pandemic, many experts worried a “mortgage deferral cliff” would take place when the option to temporarily defer monthly mortgage payments for up to six months ended last fall.
At the peak, 768,000 mortgages in Canada were in deferral but despite concerns, there has been no evidence of widespread mortgage delinquencies, according to Mortgage Professionals Canada. In fact, many homeowners who took deferrals began voluntarily resuming payments as their anxiety about the pandemic and job security reduced.
Rock-bottom interest rates are expected to continue through much of 2021 and possibly beyond. Even as home prices increase, the average intended down payment this year is 30 per cent, according to an Ipsos survey.
By the numbers
According to the Ipsos Home Buying Survey of Greater Toronto Area consumers likely to buy a house in 2021 compared to 2020:
Where they will buy:
- 35 per expect to buy a home in Toronto (↓ seven)
- 16 per cent plan to buy in York Region (↑ five)
- 15 per cent plan to buy in Peel Region (↑ two)
- Nine per cent plan to buy in Durham Region (↑ two)
- Eight per cent play to buy in Halton Region (↑ two)
Type of home they will purchase:
- 46 per cent plant to buy a detached home (↑ four and the first time an increase in that preference has been posted since 2015)
- 19 per cent plan to purchase a condo (↓ seven); 18 per cent plan to buy a townhouse or rowhouse (↑ three) and 15 per cent plan to buy a semi-detached (unchanged)
- 65 per cent expect to purchase a resale home versus a new home (↑ seven)
Source: Toronto Sun
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