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A Tale Of Two Markets



Selling prices for detached homes in the GTA continued their meteoric rise in October. Detached prices have gone up for the last 6 months in a row and are now 22% higher than the “COVID low” in April, as well as 15% above last October. The average price for a detached home in the Toronto area is now $1,204,844, just a hair’s breadth below the all-time high of $1,214,122 reached in early 2017.

Sales of detached homes in the GTA have exceeded 5,000 in each of the last four months, roughly 40% higher than in the same four months last year. This has driven inventory below 1.5 months, an extremely strong sellers’ market to say the least.

With 5 year fixed mortgage rates at obscenely low levels, and projected to stay that way (or even go lower) over the next 1-2 years, and with many condo dwellers seeking more space (both inside and outside), there is every reason to expect that the hot market for houses will continue for some time.

The market for Toronto area condominium apartments is completely different. Prices have flat-lined for the past five months, and now appear to be heading lower. Prices in October were essentially the same as last October, however, to put this in context, October 2019 was actually an all-time high for condo apartment prices.

The reason for the weakness in the condo market is that the inventory of condos for sale has been steadily rising over the past 4 months. This is not due to a lack of demand, as total condo sales were actually about 8% higher than the same 4 months last year. What’s massively different this year is the number of condos for sale. Active listings of condos have gone up by 50% since May, and October listings were more than 2.5 times higher than last October. There were actually more listings for condos than for detached houses in October, likely the first time that this has ever happened.

Crazy low interest rates are propping up condo sales, as there are still lots of people who want to buy real estate but can’t yet afford a house. Owning a condo is better than renting a condo or a basement apartment. However, COVID is driving many condo owners to houses, for reasons that everyone is by now well aware of. That trend is being further compounded by the record number of new condo completions this year (with even more to come next year) as well as an anemic condo rental market that is causing owners of investment condos (which are legion) to put their units up for sale. Like the factors behind the strong market for houses, these drivers are unlikely to change any time soon, and so the condo market will probably continue to soften for some time to come.



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