Greater Toronto real estate market sees record-high home-buying activity for sales over $3 million in 2020
Sales of freehold and condominium properties up almost 56% over 2019 figures
Luxury home sales over $3 million set a new record in the midst of a pandemic in the Greater Toronto real estate market, with the number of freehold and condominium properties sold in 2020 topping peak 2017 levels, according to a report released today by RE/MAX of Ontario-Atlantic Canada.
More than 1,000 properties changed hands over the $3 million price point in 2020, up 55.7 per cent from 2019 (1,062 versus 682) and edging one per cent ahead of the record set in 2017 (1,062 versus 1,047). The number of homes sold over $4 million climbed 53.4 per cent year-to-date (379 versus 247), while sales over $5 million appreciated 44 per cent to 180 in the GTA, up from 125 in 2019.
Uber-Luxe Activity in Greater Toronto Real Estate Market
“The housing bounce-back – during one of the most tumultuous periods in recent history – has been nothing short of remarkable,” says Christopher Alexander, Chief Strategy Officer and Executive Vice President, RE/MAX of Ontario-Atlantic Canada. “A combination of both economic and psychological drivers contributed to a robust upswing in demand, influencing one of the greatest pivots in Greater Toronto housing market history.”
Luxury Freehold Home Sales Surge Outside of 416
Economic stimulus played a definitive role in the uptick in home-buying activity, but RE/MAX of Ontario-Atlantic Canada found that the COVID-19 lockdown was the true catalyst. With renewed focus on personal space, and the ability to work from home, luxury buyers doubled down on larger homes and less densely populated neighbourhoods, with some choosing to relocate entirely out of the 416 to the 905 and beyond.
Freehold sales over $3 million surged outside of the 416 area code as a result, with Halton reporting a 188.8-per-cent increase in sales over $3 million (130 versus 45), followed by Peel at 112 per cent (89 versus 42) and York at 85.5 per cent (180 versus 97) in 2020.
“This same pattern played out in major urban centres in the US such as New York City and San Francisco where the pandemic has tipped the scales in favour of a more suburban lifestyle,” says Alexander. “And while demand is still strong in the 416, where luxury freehold sales represent 59 per cent of total sales, performance in suburban areas, especially those north and west of the city, is particularly noteworthy. Sales in the 905 bolstered overall luxury sales in 2020, leading to a record-breaking year for the uber-luxe segment of the Greater Toronto real estate market.”
Luxury Condo Sales Buck the Downward Trend
Freehold properties were not alone in their upward momentum. RE/MAX of Ontario-Atlantic Canada found luxury condominiums in the GTA bucked the downward trend for condominiums sales overall in 2020, posting a 28.8-per-cent increase in year-over-year sales at $3 million plus (58 versus 45). In fact, the number of condominium apartments and townhomes that have changed hands at the $3 million, $4 million and $5 million price points have all set new records.
“Domestic buyers were out in full-force in the GTA housing market in 2020, offsetting a decline in international home-buying activity,” explains Alexander. “With this segment largely absent throughout much of the year, the overall strength of the market, in what was essentially nine months of activity, was pretty incredible.”
Economic Impacts on Uber-Luxe Housing Market
From an economic standpoint, the GTA’s luxury segment benefited from the sharp economic rebound in the third quarter and a stronger than anticipated fourth quarter of 2020. Eighty-seven per cent of job losses that occurred in the Toronto CMA earlier in the year were largely recouped by November. After plummeting in March, North American stock markets also saw strong growth in the second half of the year. Historically low interest rates also helped prop up high-end sales. The Bank of Canada, which held the overnight rate to 0.25 per cent throughout much of 2020, indicated economic recovery would continue to require “extraordinary monetary policy support” into 2023.
“The administration of the first COVID-19 vaccine in mid-December hopefully marks the beginning of the end of the pandemic,” says Alexander, “and sets the stage for a return to normalcy in our daily lives. It won’t happen overnight. The second lockdown may hamper home-buying activity to some extent in the first quarter of 2021, but the market is expected to take flight in the spring as numbers improve and the vaccine rolls out across the country.”
Immigration Weighs Heavily on Greater Toronto Real Estate
As borders re-open worldwide, immigration will weigh heavily on local housing markets as the federal government shifts its attention to economic growth. Just over 400,000 immigrants are expected in 2021, with nearly half projected to settle in Ontario. Economic fundamentals are also predicted to improve significantly in 2021, with GDP growth forecast to climb 4.5 per cent in the province.
Alexander notes that while the uber-luxe segment of the GTA market represents only a small fraction of total residential sales, the activity at the top end bodes well for the market overall in 2021.