The Canadian real estate market has seen many unprecedented highs since the beginning of the COVID-19 pandemic. House sales increased in a big way, with many seeing long and tireless bidding wars taking place. The massive demand for housing meant that supply fell significantly, furthering heating up the competition and creating a sense of urgency with many home buyers. After many months of strong sales and high selling prices, April 2021 saw a slight dip in growth.
The Toronto Regional Real Estate Board (TRREB) reported a decrease in home sales and a slight decrease in selling price. While this report has been taken by some to mean that the Toronto real estate market is going into a state of “correction”, experts expect that prices will continue their upward trajectory.
TRREB report shows slow in growth for home sales and selling price
After a record year for the Toronto real estate market, many were taken by surprise when TRREB reported that the market had actually experienced a slow in growth in April 2021. While home sales were up 362% over April 2020, they were down 12.7% from the previous month, with 13,663 homes being sold compared to March’s 15,652. The report also showed that the average price in April was $1,090,992, slightly down from $1,097,565 in March. In April 2020 at the outset of the pandemic, the average selling price was $820,226 – a 33% increase over the past year.
The slow in growth was also met with a decrease in the amount of supply available in the Toronto housing market. While new listings were up 237% compared to April 2020, they were down 8.4% from March 2021. The decrease in supply could see competition heating up once again, as it could force Toronto home buyers to once again resort to intense bidding wars for attractive properties. The lack of housing supply has been a consistent issue over the last year, and if last month was any indication, that doesn’t look to be changing anytime soon.
The slow growth and decrease in listings could be the result of many things. Perhaps pandemic fatigue is finally catching up with the Toronto real estate market, or maybe optimistic home buyers are looking to a future filled with travel. A more likely culprit could be the Ontario-wide stay-at-home order, which has forced many prospective buyers to wait out the situation in the hopes that things improve sooner rather than later. While some buyers have shown hesitancy due to the pandemic’s worsening nature in early spring, others are jumping in feet first because of low interest rates.
What does the future of the Toronto real estate market look like?
The slow in growth shouldn’t be too concerning for Toronto real estate buyers, with most experts agreeing that the price of homes in Toronto is still expected to rise through the summer and into the next year. The decrease in inventory will see prices remain consistently high, with many homeowners willing to wait for an attractive offer rather than offload their property for a lesser price.
Some have pointed to a stagnation in Toronto’s population growth as an ominous sign of things to come, but the reality is that the expected “mass exodus” from Toronto to smaller communities in Ontario never really took place in any significant way. It’s likely that older Torontorians may have moved away to find an affordable forever home and will continue to do so, but the pressure remains for others within the city. It’s unlikely that any mass exodus will ever occur, even with the apparent perfect storm of high real estate prices combined with the remote work revolution.
The freedoms of working from home have given workers more independence, but many still continue to feel the strain associated with not being able to meet with employers, managers and colleagues in a face-to-face setting. By moving out of the city, many of these people would effectively squander their opportunity to make a lasting impression with teams, giving many a major reason to stay closer to the city. Some may leave to find their desired greener pastures, but most will stay within the city, especially with so much uncertainty in the air regarding a return to the office and the future of remote work.
With housing supply consistently low and prices at an all-time high and expected to continue their upward trajectory, the future of the Toronto real estate market looks bright. Until things can completely return to “normal” and Canadians are once again allowed to travel the world, we can expect that the housing market will stay strong.
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