Buyers have returned to the Toronto housing market after a brief but dramatic decline in activity at the start of the pandemic. The lockdown measures that began in mid-March put an abrupt hold on what was primed to be a busy spring market, but this “pandemic pause” proved to be temporary. Activity resumed in May and June in what would be a delayed spring market. According to the RE/MAX Fall Market Outlook Report, Toronto is currently experiencing seller’s market conditions, with few listings in most areas, demand continuing to exceed supply, and low interest rates enticing more buyers into the market.
If you’re wondering where Toronto house prices may be headed this year, keep your neck craned upward. As long as the market continues to face an imbalance between high demand and low inventory levels, prices will remain strong. Based on these factors, a 5% increase in the average residential sale price is expected in the Toronto housing market for the remainder of 2020.
During the peak lockdown period, many Torontonians reassessed their living situations, with RE/MAX brokers reporting increased interest in homes near green space, with more yard space and separate entrances, as well as in properties near Lake Ontario or other bodies of water. According to a survey conducted by Leger on behalf of RE/MAX Canada, 32% of Canadians no longer want to live in large urban centres, and instead would opt for rural or suburban communities. Even with Canadians living in cities opting for more suburban/rural living, listings in Toronto continue to see multiple offers. So, while it’s clear that Canadians’ tastes have shifted, there is still huge demand for the popular Toronto housing market.
Ontario Real Estate Trends
What’s been happening across other Ontario real estate markets? With the province being one of the hardest-hit regions in Canada, markets such as Niagara, Mississauga and Kitchener-Waterloo experienced significant drops in activity. However, come June, they bounced back aggressively as economies began to reopen. With all of Ontario now in phase three of re-opening and consumers more comfortable engaging in the market, market activity in Ontario is expected to remain steady in the fall, with modest price increases of up to 6% in some regions.
Leading indicators from RE/MAX brokers and agents across Canada’s housing market point to a strong market for the remainder of 2020. According to the RE/MAX Fall Market Outlook Report, RE/MAX brokers suggest that the average residential sale price in Canada could increase by 4.6% during the remainder of the year. This is compared to the 3.7% increase that was predicted in late 2019.
The pandemic has prompted many Canadians to reassess their living situations, with 32% preferring rural or suburban communities over their urban counterparts. This trend is stronger among Canadians under the age of 55 than those in the 55+ age group. Not only are Canadians more motivated to leave cities, but changes in work and life dynamics have also shifted their needs and wants for their homes. According to the survey, 44% of Canadians would like a home with more space for personal amenities, such as a pool, balcony or a large yard.
Canadians equally split on their confidence in the housing market
Canadians are almost equally split in their confidence in Canada’s real estate market, with 39% as confident as they were prior to the pandemic, and 37% slightly less confident. When it comes to the prospect of a second wave of COVID-19, 56% of Canadians who are feeling confident in Canada’s real estate market are still likely to buy or sell.
“The classically hot spring market that was pushed to the summer months due to the COVID-19 pandemic created a surprisingly strong market across Canada and across all market segments,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Looking ahead, government financial aid programs may be coming to an end in September, which could potentially impact future activity; however, the pent-up demand and low inventory dynamic may keep prices steady and bolster activity for the remainder of 2020. Overall, we are very confident in the long-term durability of the market.”
Additional highlights from the 2020 RE/MAX Fall Market Outlook Report Survey:
48% of Canadians would like to live closer to green spaces
48% of Canadians say it’s more important than ever to live in a community close to hospitals and clinics
33% of Canadians would like more square footage in their home and have realized they need more space
44% of Canadians want a home with more outdoor space and personal amenities (i.e. balcony, pool etc.)
About the 2020 RE/MAX Fall Market Outlook Report
The 2020 RE/MAX Fall Market Outlook Report includes data and insights supplied by RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments.
Seller’s market expected in 2020, prices to increase 6%
RE/MAX is predicting the Toronto housing market will favour sellers in 2020, with average residential sale price increasing by six per cent next year, based on increased demand in the detached market, better employment rates and economic growth, as well as improved overall affordability in the Greater Toronto Area over the last three years.
The Toronto housing market sat in seller’s territory in 2019, and this trend is expected to continue next year. The rate of new construction in the city is too low to meet the increasing demands of Toronto’s quickly growing population, which continues to put pressure on the market.
Currently there are two months of inventory, and these conditions are expected to prevail in 2020. Move-up buyers will drive demand in 2020.
Growth of Toronto luxury housing market continued to thrive in 2019, with the sale of homes over $5 million rising by 8.5 per cent year-over-year. Growth in this property segment is expected to continue in 2020.
Interest rates and employment/income growth will have the greatest impact on the market in 2020.
Durham region and west Scarborough will be in high demand, which RE/MAX attributes to affordability, proximity to transit and easy access to employment in Toronto’s downtown core.
From a national perspective, RE/MAX anticipates a leveling out of the highs and lows that characterized the Canadian housing market in 2019, particularly in Vancouver and Toronto, as we move into 2020. Healthy price increases are expected, with an estimated 3.7-per-cent increase in the average national residential sales price, according to the RE/MAX 2020 Housing Market Outlook Report.
Most individual markets surveyed across Canada experienced moderate price increases year-over-year from 2018 to 2019. However, some regions in Ontario continue to experience higher-than-normal gains, including London (+10.7 per cent), Windsor (+11 per cent), Ottawa (+11.7 per cent) and Niagara (+12.9 per cent).
“Southern Ontario is witnessing some incredibly strong price appreciation, with many regions seeing double-digit gains,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Thanks to the region’s resilient economy, staggering population growth and relentless development, the 2020 market looks very optimistic.”
Lydia McNutt is an award-winning journalist and editor, with almost two decades of experience in the real estate sector. At RE/MAX, Lydia is responsible for developing consumer-facing content while promoting the RE/MAX brand. This includes housing market reports and RE/MAX network news featured on the RE/MAX Canada blog and social media channels. Lydia has been published nationally on topics ranging from real estate, architecture, decor and design, to finance, business, technology, entertainment and lifestyle. When she’s not head-down at her writing desk, Lydia is busy “momming” in Oakville, Ontario, where she lives with her husband, two kids and their chocolate lab, Betty. Email Lydia at email@example.com