No one anticipated the onset of the coronavirus pandemic last year and how it brought massive effects to the real state market. However, the Toronto housing market proved to be resilient as it started to recover toward the end of the second quarter of 2020. There have also been noticeable changes in buyer’s preferences in terms of location and type of housing. Here is a snapshot of the market activity concerning home prices in the previous year.
Now that we are at the start of this new year, you might have wondered what is in store for the Toronto housing market in 2021? Let’s take a look at the following essential factors such as home prices, demand, immigration, condo sales as well as how the continuing pandemic might affect this year’s projections.
Buyers’ demand shifts to detached homes outside the city
It can’t be denied that the previous year has been tough and most of us experienced huge changes like never before. The students shifted to online classes, many workers now work at home, cancelled gatherings and community events as well as limitations on travels and movement for some people.
With most of their time spent inside their homes, it is no wonder if people will start to long for bigger and greener spaces. After all, there is less need now to live close within the city core given that remote work is now an option for most employees. Because of this increasing demand for detached suburban homes, this year’s housing market (other than the condo) is expected to favour sellers.
Home prices are expected to increase by 6%
As mentioned above, there has been a significant increase in buyers’ demand for homes with bigger spaces often found outside the city. Last November 2020, there has been a 13.3% increase in average selling price compared to the same month in 2019. Also, home sales jumped to 24.3% compared to the same month in 2019 and most of these sales are for detached homes.
It is expected that this trend will continue this year which will result in a shortage of home supplies and ultimately lead to increased home prices. In fact, average home prices are expected to increase by 6% to approximately $974,015 across all property types according to RE/MAX.
The condo market favours buyers
As people crave more space and outdoor opportunities outside the city, there has been a notable slowdown in condo sales. Compared to the housing market for detached homes, the condo market favours buyers. This presents a great opportunity for those who are renting and have been thinking about buying their own home for some time. With less demand, there is an abundance of condo supplies which helps keep the prices down.
However, don’t delay for too long. There are government programs and low-interest rates to help the condo market start rolling again. This year, it is expected that the condo market will start to slowly recover as immigrants and students start to arrive because of the easing restrictions. Let’s learn more about it below.
A targeted increase in immigration
Because of COVID-19, there was a drop in newcomers due to travel restrictions. However, Canada aims to welcome more than 400,000 immigrants starting this year and as high as 421,000 by 2023. This will be the highest level of immigration in its history, the previous record was in 1913 with 401,000 newcomers. The main reason for this high immigration is to balance the negative economic effects of its aging population and low birth rate.
Most of the immigrants that come into the country settle in the Toronto area. As a result, there will likely be an increased demand for housing especially for condominiums based on their affordability for first-time homebuyers as well as rentals. In fact, there are already bidding wars happening in some areas of Toronto. This multiple offers situation drives the housing market in favour of the sellers.
How the pandemic will continue to affect the housing market
The pandemic has brought drastic effects to the market, and these effects might linger for some time. It has certainly affected the way buyers make decisions in choosing the size and location of their homes and how investors consider and assess the risks in the Toronto real estate market given how the rental market and pricing were greatly affected.
There is still a continuous struggle to contain the coronavirus infection, but with the release of the vaccine and some candidates have reported favorable results, it is probable that people will begin to relax and start to resume their pre-pandemic routines. If there won’t be a third wave of the infection, it is likely that the housing market will see the usual productivity in spring.
Basically, the wild card is the Coronavirus and it is difficult to determine for sure how the market will turn out this year. However, the observable trends in buyer’s preferences and changes in lifestyle indicate how it will drive the real estate market. As mentioned earlier, the market for detached homes favours sellers as increased demand for bigger spaces resulted in a shortage of supplies and price hikes. On the other hand, the condo market favours buyers as the plentiful number of listings help steady the price for condo properties. Now might be your golden opportunity to buy or invest in the condo market.
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