The Greater Toronto Area’s real estate market continued to play catch up after a slow spring, with another record-breaking month.
The Toronto Regional Real Estate Board (TRREB) says 10,775 homes were sold in August, up 40.3 per cent compared to August 2019.
“Increased demand for ownership housing has been based on improving economic conditions, in terms of monthly GDP growth and job creation, and the continuation of very low borrowing costs,” said TRREB President Lisa Patel in a press release.
Patel also cited pent-up demand for the unusually strong month. John Pasalis, president and broker of record at Realosophy Realty, agrees and says buyers and sellers shouldn’t read too much into the numbers.
“We have a market that is 2 months behind schedule (because of COVID). So many of the sales we are seeing today should have occurred in the spring but got pushed out to this summer. So we are in effect comparing a spring type market in 2020 against the typically slow summer market last year,” Pasalis told Yahoo Finance Canada.
Sales were up across the board, but semi-detached homes led the way with a 66.8 per cent increase, followed by detached homes (50.6 per cent), townhomes (45.8 per cent) and condo apartments (10.9 per cent).
August’s sales data point to a shift out of the core and into the suburbs. Except for condos, sales were higher in the ‘905’ compared to the ‘416’.
“We are also seeing a surge in demand from people who weren't looking to buy a home before COVID but suddenly have decided to move out of the city looking for a bigger home and a bigger yard,” said Pasalis.
The MLS Home Price Index Composite Benchmark was up by 11.1 per cent. The average selling price hit a new record with a 20.1 per cent jump to $951,404.
“Average prices are also skewed up because there are proportionately more [houses] vs condos selling this year compared to last year and because houses are more expensive - it is skewing the average sale price up,” said Pasalis.
“But all that said, it is noteworthy that the trend we are seeing today is the exact opposite of what many economists including CMHC predicted. They predicted a decline in sales and home prices and we are seeing the exact opposite trend in the GTA.”
Hilliard MacBeth, a financial advisor and author of When the Bubble Bursts: Surviving the Canadian Real Estate Crash, Second Edition 2018, says new listings outpacing sales is a bad omen — especially for the condo market.
“New condo listings in Toronto in the month of August have been steady between 3,000 and 4,000 units for a decade until now. In August 2020 they jumped to more than 5,500,” MacBeth told Yahoo Finance Canada.
“This abundance of new listings for condos is a signal that the market will weaken in the next few months as mortgage deferrals expire, government income support programs are reduced and this recession continues.”
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.