Market Review | February 2021

You’ll know from our past few monthly market reviews that the freehold market has been red-hot for some time but we have been keeping a sharp eye on the condo market, which has been struggling for months. Recently, however, condos have shown signs of a triumphant return. With overall Covid-19 uncertainty decreasing, buyers being pushed back into the condo market due to rising freehold prices and immigration on steady footings, we expect to see condo back on top in the not-so-distant future. In-fact as we write this they may be back already, stay tuned for next months review.

Average prices: The average Toronto property price was $995,201 in February which is up +0.6% (YoY), but up + 14.88%(MoM). This price doesn’t show the true story, the gap between average condo and average freehold prices was over ½ million dollars.

Detached and semi-detached properties saw a substantial increase over January of last year, detached up + 13.38% (YoY), and semi-detached up + 9.62% (YoY).

While condo prices saw a decrease of – 6.34% (YoY), they are up significantly + 8.3% (MoM). We anticipate this trend to continue, as bidding wars have returned, and there is a severe shortage of inventory. We’ve also noticed that some developers are postponing pre-con sales as they expect prices to be higher towards the second half of the year.

HPI: The Home Price Index provides an apples to apples comparison of home prices in the city and reflects a more accurate change in prices. According to this metric Toronto home prices are up + 6.26% (YoY) and most notably, condos are essentially flat year-over-year at + 0.08% (YoY).

Sales: Sales activity continued growing in February, up double digits across the board including +51% (YoY) for all property types. Looking at the graph comparing YoY sales you will see the trajectory from Jan to Feb matches that of last year, the biggest difference is the significantly larger volumes. It will be interesting to track this over the course of 2021 to see if the total sales will be higher or just spread out differently than previous norms.

Condo sales continued to climb back, up + 62% (YoY), and + 27% (MoM). Likely causes are a mix of increased confidence, more young buyers entering the market or active buyers being pushed into the condo market due to accelerating freehold prices.

New Listings: New listings increased + 33.73% (YoY) driven by activity in every property type. Detached + 16.5% (YoY), Semi + 54.5% (YoY), Condos + 39% (YoY). We expect this year’s spring market to follow previous years trends, meaning more and more listings will come to market going into April/May.

Active Listings: Active listings are up double digits across almost every property type except detached – 13.79% (YoY), Semi + 32.1% (YoY), Condos + 52.1% (YoY).

We’ve been following the recovery of the condo market and sharing the months of inventory stat for some time now as it’s a great indicator of where prices are heading. October/November appear to have been the peak in terms of inventory. Since then we’ve seen a continual decrease, and have now returned to a seller’s market. For comparison here are months of inventory for other property types: Detached 1.03, Semi 0.61, Row 1.04.

2.20 months – July
2.97 months – August
3.50 months – September
3.98 months – October
3.65 months – November
2.01 months – December
1.39 months – January 2021
0.88 months – February 2021

We mentioned last month that this stat is a lead indicator of where prices are going and we’re now starting to see price growth in the condo market.

Our Thoughts

It is very tough being a buyer in Toronto’s market right now, even if you are looking for a condo, expect to compete in multiple offers. There is a severe shortage of inventory, debt is very cheap (a client just got 1.45% variable), and a ton of money is beginning to enter Canada via immigration. As one of our clients in private equity recently said, we are about to witness a massive increase in asset prices.

A few interesting tidbits:

1. The pandemic has driven many people in the city to move to the 905 area and as a result price growth in those areas has exploded. Average prices in many of these 905 cities are now higher than some pockets in the core, which has been overlooked during the past years focus on “escaping the city”. If you are looking to buy a home, don’t assume outside of the city is less expensive. Reach out to us if you’re interested in learning more ->

2. With freehold property prices seeing significant growth over the last year, we believe many buyers will be forced back into the condo market due to the rising minimum price points of detached homes. The gap between condo prices and freehold prices has increased significantly since the beginning of the pandemic. This gap will shrink as condo prices continue back.