The Greater Toronto Area’s real estate market had its busiest September on record, even as COVID-19 cases rise and the Canada Emergency Response Benefit (CERB) wound down.
The Toronto Regional Real Estate Board (TRREB) says 11,083 homes were sold during the month, 42.3 per cent more than September 2019.
TRREB continued to beat the drum of pent up demand to explain the unusually strong sales this late in the year, combined with low interest rates. But it also warned the pandemic’s economic effects could cool the market in the coming months.
“Further improvements in the economy, including job growth, would support strong home sales moving forward,” said TRREB president Lisa Patel, in a release. “However, it will be important to monitor the trajectory of COVID-19 cases, the related government policy response, and the impact on jobs and consumer confidence.”
As has been the trend during the pandemic, year over year sales growth was led by detached (54.7 per cent), semi-detached (53 per cent), and townhomes (46.9 per cent). Condo apartment sales were up 14.6 per cent).
A segmented housing market
The other trend that continued to make a mark was stronger sales in the suburbs, with 3,555 properties changing hands in the city of Toronto or the 416 area code, compared to the 905 regions led by South Simcoe County (20 per cent), Orangeville (17.43 per cent), and Durham region (17.07 per cent). It’s worth nothing that those regions represent a tiny portion of the overall GTA market.
The uneven demand for higher-priced types of homes pushed the average selling price up to $960,772, a 14 per cent rise year over year and a new record. The MLS Home Price Index Composite Benchmark, which aims to smooth out those kinds of distortions, was up 11.6 per cent.
“On a GTA-wide basis, market conditions tightened in September relative to last year, with sales increasing at a faster pace than new listings,” said Jason Mercer, TRREB’s chief market analyst.
“With competition between buyers increasing noticeably, double-digit year-over-year price growth was commonplace throughout the region in September, resulting in the overall average selling price reaching a new record.”
Slowdown has already started
Century 21’s Scott Ingram focuses primarily on the 416 region. He says the slowdown has already started with sales dropping off during the last couple of weeks.
Ingram says the 905 region has been particularly hot.
“Last month it was 67.9 per cent of TRREB sales. For comparison, last September it was 61.7 per cent (and for all of 2019 it was 63.3 per cent),” Ingram told Yahoo Finance Canada.
However, he says there are signs of a cooldown.
“But, I see 905 slowing already, with year over year average price growth slowing in the last month from 18.4 per cent to 16.7 per cent and the sales to new listings ratio declining from 67 per cent to 64 per cent,” said Ingram.
The condo market is up against the headwinds of slowing sales coupled with rising inventory. Ingram says things could get worse.
“When tracking months of inventory, I'm seeing 416 condos get worse on a weekly basis,” said Ingram.
“I don't see it stabilizing until the active listings stop growing. They grew by 95 in the last week (Tuesday to Tuesday). For the 18 weeks prior, the average increase was 205, so at least the rise in active listings appears to be slowing.”
Ingram says freehold sales are slowing too, suggesting pent up demand has been satisfied, but says it’s hard to make predictions.
“Many Ontario real estate markets (as well as the stock markets) managed to punch through a bunch of headwinds already this year, probably largely buoyed by extremely low interest rates, which aren't rising much anytime soon.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.