There’s A Chill In The Air – But NOT in the Real Estate Market!
Sales and prices for houses in the Toronto area continued their torrid pace in November. The average price for a detached home slipped very slightly from October, but was still 15% higher than last November. Sales were lower than October, which is normal for this time of year, but almost 30% above last November, and year-to-date sales were 13% above 2019.
The inventory of detached homes for sale continued to drift lower, and was just above one month’s supply in November. There’s no sign of a let-up in this intensely hot sellers’ market.
The Toronto area condo market is a very different story, as it has been since the spring. Prices fell for the second month in a row, and are now 2% lower than last November.
On the other hand, it’s encouraging that sales of condo apartments remain strong, about 7% higher than last November, and the inventory of condos for sale seems to be leveling off at just over 3 months’ supply.
Clearly, demand for condos remains strong; the weakness is due to over-supply, both because of COVID and also because of the record number of condo completions this year. This suggests that the condo market should return to good health once COVID is behind us.
This is the time of year for predictions, so I offer the following for Toronto area prices in 2021:
- Re/Max is forecasting a 6% price increase;
- Royal LePage is forecasting a 5.8% price increase;
- A recent survey of economists predicts a 5% price increase;
- Moody’s expects prices to fall by 9%; and
- CMHC continues to stand by the prediction they made last May for prices to fall by 7-18%.
The differences among these forecasts trace mainly to the relative emphasis placed on the current momentum in the economy and the real estate market, as against the risk of economic weakness if/when the reality of the damage done by COVID restrictions catches up with us.
Obviously, forecasting the real estate market (not to mention almost every other market) has become a mug’s game in the days of COVID. We’ll just have to wait and see how the future unfolds.
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