GTA real estate sets new records as summer heats up

Greater Toronto Area real estate roared back to life in July, with prices reaching new highs and sales numbers recording huge increases compared to last year.

According to a report released by the Toronto Regional Real Estate Board (TRREB) today, there were 11,081 homes sold in the GTA in July – a 29.5% year-over-year increase. In fact, that was the most sales recorded in a single month since April 2017 and the ninth highest sales total ever recorded.

Perhaps most interesting is where the sales increases occurred. In Toronto, there were 3,577 sales, which is 15% more than in July 2019 but it didn’t rank in the top 20 months for home sales in the city. Similarly, York region saw a 28.1% year-over-year increase to 1,850 sales but it was only the 20^th best month. Meanwhile, Halton Region (1,198 sales – a 38.3% YoY increase and the second best month ever), Peel Region (2,339 sales – a 29.3% YoY increase and the ninth best month ever), and Durham Region (1,583 sales – a 52.1% YoY increase and the most sales ever recorded in a single month) saw huge increases and record or near-record months.

This backs up some of the anecdotal evidence that suggests the Covid-19 pandemic has inspired buyers to look farther afield to areas where they can buy larger properties with more land and space. That theory is also supported by the statistics for the share of home sales by property type. According to the TRREB report, detached homes accounted for over 50% of sales for the second month in a row (51.1% in June 2020, 50.8% in July 2020). For reference, the five-year average for detached homes is 45.5%, so the increase in market share is quite significant.

Meanwhile, condo apartments continued to account for a lower share of the market than usual. The five-year average for that property type is 27.6% of sales but in May, June and July it has accounted for 21.8%, 20.6% and 21.9% respectively. It highlights a significant change in the market, with buyers more focused on single-family homes and increased opportunities for sellers outside of Toronto.

With detached homes taking up a larger share of sales and demand continuing to outpace supply, it is perhaps unsurprising that the average sale price hit a new high for the second month in a row. The average sale price of a home in the GTA was $943,710 – the highest average ever, a 16.9% year-over-year increase and only the sixth time it has been over $900,000. In Toronto, the average price dropped slightly from the previous month but saw a 21.1% year-over-year increase and was only the second time ever that the average has been over $1m.

Elsewhere, there were new average price records set in Peel region ($902,257), Durham Region ($709,640) and Dufferin County ($667,375) and prices increased in all regions by at least 10% year-over-year.

While there is clearly lots of buying activity right now, there were also signs of sellers returning to the market. Across the Greater Toronto Area, there were 17,956 new listings in July. That is the highest figure for new listings since May last year and only the fourth time in the last three years that new listings have reached above 17,000. In fact, it is the 19^th highest total ever recorded for a single month and the highest total ever recorded in the month of July.

What does all this mean? The spring months of March, April and May are usually among the busiest for real estate in the GTA but that was not the case this year because of the coronavirus-enforced shutdowns. Clearly there was some pent-up demand and we are seeing record levels of activity as a result. This could be because the three-month spring market was postponed to the summer, or a sign of great confidence amongst buyers that will continue in the near future.

One clear sign over the last two months is that buyers have returned to the market in greater numbers than sellers. Even though seller numbers have increased recently, new listings are not increasing at the same rate as sales and that is reducing the supply of homes for sale. In the short-term at least, that will create greater competition for listings, bidding wars, and probably a further increase in prices.