Uber-Strong Finish For 2020 Toronto Market
Well, 2020 is finally behind us, and what a roller coaster ride it was!
Houses and condo apartments followed very different trajectories through 2020.
House prices rose steeply in the first quarter, and then collapsed in the second quarter in the wake of COVID restrictions. Throughout the second half of the year, prices rose steadily and ended up 15% above 2019 and a jaw-dropping 26% higher than the April low.
Sales of houses were up 15% over last year, despite the second quarter crash, and the inventory of houses for sale has been falling steadily since April. December sales were an astonishing 53% higher than a year earlier, and inventory was an insanely low 0.9 months’ supply.
Clearly, houses are in an extreme sellers’ market in the Toronto area, suggesting a very hot spring market in 2021.
The Toronto condo market in 2020 was a completely different story.
Like houses, condo apartments started the year very strong, and then both prices and sales collapsed in April. The condo market also bounced back in May, but then prices went flat for five months and ended the year with four down months in a row. For the year as a whole condo prices were up 7% over 2019, but by December prices were almost exactly the same as last year.
Sales of condo apartments were 5% lower than 2019 for the full year, however, sales improved dramatically over the past four months and December condo sales were actually 75% higher than last year!
Condo apartment inventory was up and down all year: low in the first quarter, very high in April, falling from May through July, increasing during the summer, and then plummeting in December.
Strong sales of condo apartments demonstrated that demand for condos has held up in spite of COVID: people still want to own real estate, and condos remain affordable alternative to houses. What was different in 2020 was the supply of condos for sale. COVID restrictions hammered the rental market, encouraging many investors to dump their rental condos. Coincidentally, a new Toronto bylaw basically banned short term (Airbnb) rentals, except for your principal residence, and this led even more investors to sell their (very profitable) Airbnb condo units. The bottom line is that the volatility in the condo market was driven by increased supply of condos for sale, not by lower demand. The fact that inventory dropped steeply in December suggests that the supply surge may be ending, and this bodes well for the condo market in 2021.
So, all signs are pointing toward a robust Toronto market in early 2021, despite the COVID 2nd wave and severe lockdown restrictions. What a strange world.
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