2020 Market Year in Review :
The first quarter of 2020 started off strong until the
pandemic hit in mid-March followed by the province-wide shutdown, which resulted in historical
low market activity. However, sales growth quickly
rebounded in the latter half of the year, which is a testament to the resilience and flexibility of the regional
economy and population. For 2020 as a whole, 95,151
sales were reported through TRREB’s MLS® System, an
increase of 8.4% year over year, whereas new
listings were up only by 2.6%. The disconnect
between new listings and sales accelerated the growth
of price. The overall average selling price increased by
13.5% to $929,699 in 2020.
Outlook for 2021
Home ownership will remain strong in 2021. Looking
ahead, total home sales are expected to range between
100,000 and 110,000. In addition, the overall average
selling price for all home types and areas combined
will eclipse the $1,000,000 mark for the first time.
Renting in the GTA :
Despite the economic uncertainty resulting from
COVID-19, the demand for rental accommodation
remained very strong in the GTA in 2020. However, the
number of condominium apartments listed for rent at
one point during 2020 almost doubled compared to
2019. Increased supply resulted in more negotiating
power for prospective tenants, as well as a decline in average rents for condominium apartments. But looking
forward, as economic growth continues to strengthen
and population growth starts to accelerate, based
on immigration and non-permanent migration,
demand for rental units in the GTA will remain
strong and potentially accelerate.
Industrial, Office and Retail Sectors:
A shift in commercial market activity was experienced in 2020. Altus Group found that lockdown restrictions and gathering limitations due to COVID-19 posed challenges to the office and retail
sectors, which saw year-to-date volumes drop by 61% and 20 %, respectively. However, pent-up
demand drove activity in multi-family and residential
land markets, and demand for logistics space to keep
up with e-commerce sales led to strong investor preference for industrial assets. Investors are cautiously optimistic that 2021 will see a recovery in the second half
of the year, driven by continued growth in industrial
and multi-family assets, and economic improvement
as a result of the vaccine.
Climbing New Home Sales:
Altus Group also reported a solid year for new home
sales. The market saw overall sales grow by 5% to
almost 38,000 homes, which is above the 10-year
average and the best year reported since 2017. Demand
occurred across the built-form spectrum, including detached, semi-detached and row townhouse units, with
both townhouse and detached sales almost doubling
last year’s volumes. However, strong sales have eroded
supply and have put upward pressure on prices. Sales
growth was strongest in the 905 regions, with more
single-family homes sold in York Region in 2020 than
in the entire GTA in 2018. Looking ahead, single-family
new home sales are expected to remain active, but will
be impacted by declining inventories and rising prices.
The Mortgage Industry and the
Deferral:
Cliff
The federal government’s response to the pandemic
included the mortgage deferral program, which led
768,000 homeowners to defer their mortgage in 2020.
While there were predictions of a “deferral cliff,” there
has been no evidence of widespread mortgage delinquencies. Instead, Mortgage Professionals Canada
found there was a rebound in activity, and similar to
Realtors, mortgage brokers also had a busy year. Even
in December, a time we would usually see a seasonal
slowdown, activity was still strong with record-high
real estate transactions. Healthy activity in the real
estate sector with the continuation of low interest rates
is expected in 2021.
Bridging the Gap:
Between Detached
Homes and High-Rises
As a result of municipal zoning restrictions, the majority of our urban areas lack a variety of housing – they are
mostly occupied by low density single-family homes.
Urban Strategies Inc. found that increasing the amount
and variety of housing, or in other words, addressing
the “missing middle,” in those areas could significantly,
and quickly, alleviate the tight housing supply. Allowing secondary units in all Toronto neighbourhoods
could result in the rapid addition of 300,000–400,000
units. Increasing the missing middle can stabilize the
population in these areas and also help sustain social and retail amenities. The Urban Strategies report
demonstrates excellent examples of efficient and
aesthetically pleasing missing middle types of development in both urban and suburban settings.
A Call for Action:
While some things changed, many did not. Housing affordability and tight housing supply, in addition to the
variety of supply, continue to remain key issues across
our communities. We also heard from consumers, and
we know that demand is stronger than ever. With that
said, TRREB will continue to call on policymakers to
make a stronger commitment to turn the GTA’s housing challenges into long-term solutions
2021 Buying Intentions and Housing
Market Outlook:
Ipsos Home Buyers Survey Results
In November/December 2020, Ipsos polled GTA
consumers on their home buying intentions in 2021.
While COVID-19 presented a period of uncertainty, the
pandemic does not appear to have dampened home
buying intentions. The share of survey respondents
who indicated they were likely (combined very likely
and somewhat likely responses) to purchase a home to
live in over the next year was 30% – in line with
the 29 per cent share reported in the fall 2019 and 2018
surveys. Home buying intentions were highest in Peel
Region and Toronto – over 30%
Concluding Thoughts on Market Outlook:
1. As frontline health care workers became the first
recipients of vaccines across the globe in
December, raising optimism of an end to the pandemic in the coming months, we expect to see continued
healthy activity in the real estate sector into 2021.
2.The governor of the Bank of Canada has reassured Canadians that their overnight rate will
likely remain at the effective lower bound until 2023,
and continue with their quantitative easing through
debt purchasing to ensure continued low interest
rates in the credit markets.
3.While bond yields will increase slightly with
market optimism about a return to normal, the
fiscal policy of the Bank of Canada and federal government will ensure mortgage rates will also remain
near historic lows through much of the coming year
and possibly beyond.
4.With the mortgage deferral programs also appearing to have wound down without large foreclosures required, the mortgage market will remain
strong, with our banks and lenders well positioned to
continue to extend credit at very low rates.
5. And as immigration returns and with the federal
government’s increased targets for newcomers,
demand should remain strong through 2021.
2021 Housing Market Outlook :
The latest Ipsos Home Buyers survey results suggest
that home buying intentions for 2021 remain strong
from a historic perspective. With this in mind, the
following are key points summarizing TRREB’s
housing market outlook over the next year:
1 Combined home sales reported through
TRREB’s MLS® System for the GTA, south
Simcoe County and Orangeville are expected to
range between 100,000 and 110,000 in 2021, with a
point forecast of 105,000 transactions.
2 The pace of new condo apartment listings will
start to ebb, especially in the second half of 2021.
With single family listings remaining constrained,
expect total new listings to range between 155,000
and 165,000, with a point forecast of 160,000.
3 The overall average selling price for all home
types and areas combined will eclipse the
$1,000,000 mark for the first time on a calendar year
basis. TRREB’s point forecast is $1,025,000, representing a year-over-year increase of 10%.
Looking Ahead :
Forecasting activity during a pandemic is challenging – leaving uncertainty around the impact from the pandemic on the housing market in 2021. While demand for housing in the GTA is expected to be robust, a softening rental market, restrictions on short-term rentals and sharply rising resale inventories for condominium apartments are expected to dampen demand. Single-family new home sales are expected to remain more active but will be impacted by declining inventories and rising prices. Townhouse units are expected to remain in high demand, given the relative affordability compared to apartment units, but overall sales volumes are expected to dip given the lack of supply.
