Before we jump into the monthly real estate stats and analysis, I wanted to ask - how are you doing? In these unexpected and unprecedented times, I hope that you, your family, and friends are keeping well and making the best of your situation. If there is anything I can do for you please let me know.
It has been an interesting start to the decade, to say the least. I think more than ever it is important to read past the headlines related to the real estate market, especially headlines about the country as a whole that do not capture the specific situation in the Greater Toronto Area (the GTA).
I have had many calls and emails from clients wondering what is going on with the market and if they can submit offers 20% below market value or wondering when that day may come. I advise them that day is not yet here and may never come. The real estate market remains stable in the GTA for the time being.
Sales in April 2020 were, of course, way down coming in 67% less than they were in April 2019. However, an important note as we will discuss below is that new listings were also down by 64.1% from a year ago. The average selling price for all homes was up a whopping 0.1%.
With these turbulent times and uncertainty over the real estate market, a key real estate market term to understand is months of inventory (MOI). This term is very well known to REALTOR®️'s as it helps us determine market balance and the direction that prices are likely to go.
MOI uses the current inventory of homes for sale and the number of homes that sold in the past 30 days to estimate how long it would take for all the current homes on the market to sell if no more homes were listed. When the MOI is below 4 months, prices are likely to rise. When the MOI is between 4-6 months, prices are likely to remain flat. When the MOI is above 6 months, prices are likely to decline.
For a very long time in Toronto, we have had reduced supply and a ton of demand that has kept the MOI low, which led to the price appreciation we are all accustomed to. In the last month, while demand has fallen, so too has supply. As a result, in many segments of the market, conditions have continued to favour sellers with the MOI under 4 months and prices continuing to rise.
So, if you are wondering why prices have not fallen off of a cliff, this can help tell us why. It would take some time and a lot of supply to hit the market for the situation to change. I can also tell you that based on the many buyers I am speaking with on a daily basis, interest and demand is already starting to come back into the market as we all adjust to this new normal of mask-wearing, regular handwashing, and social distancing.
What remains unknown at this time is how long we will remain in this present state and what the long term impacts on the local economy will be. What I can tell you here is that we were heading into one of the hottest years on record for Toronto real estate in January and February and a lot of that demand is likely to come back to the market in the near future as the COVID-19 situation improves. Using what we know about MOI, you can likely form a vision of what the future may hold for the Toronto real estate market.
As always, if you are thinking about buying, selling, or investing in real estate at this time you should seek the professional advice of a REALTOR®️. Please feel free to contact me by email or at 416-453-7143 for advice on navigating the current market.
Toronto Real Estate Board (TREB) Market Watch Report
Below is a market snapshot of single family detached and condominium apartment price growth by municipality as of April 30, 2020.
The figures cited in this note are an average. Please contact me for neighbourhood specific information so you can make an informed decision if you are thinking about making a move.
If you want to know how prices are performing by asset class in your specific neighbourhood or any neighbourhood in the GTA you may be interested in, please click here.
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Single Family Detached Home Price Index
Toronto: +0.94% (1 Month), +4.98% (3 Month), +6.67% (6 Month), +7.95% (1 Year)
Mississauga: +0.79% (1 Month), +5.62% (3 Month), +8.74% (6 Month), +10.15% (1 Year)
Brampton: -0.07% (1 Month), +5.21% (3 Month), +8.17% (6 Month), +11.26% (1 Year)
Vaughan: +0.61% (1 Month), +4.32% (3 Month), +7.21% (6 Month), +8.45% (1 Year)
Richmond Hill: +1.57% (1 Month), +5.27% (3 Month), +6.71% (6 Month), +6.90% (1 Year)
Markham: +1.16% (1 Month), +5.51% (3 Month), +6.15% (6 Month), +6.88% (1 Year)
Condominium Apartment Home Price Index
Toronto: +0.98% (1 Month), +6.18% (3 Month), +8.42% (6 Month), +12.51% (1 Year)
Mississauga: +1.33% (1 Month), +6.48% (3 Month), +11.61% (6 Month), +17.49% (1 Year)
Brampton: +3.28% (1 Month), +9.62% (3 Month), +10.28% (6 Month), +20.68% (1 Year)
Vaughan: +0.96% (1 Month), +6.60% (3 Month), +9.19% (6 Month), +10.88% (1 Year)
Richmond Hill: +2.13% (1 Month), +5.89% (3 Month), +8.19% (6 Month), +11.93% (1 Year)
Markham: +1.14% (1 Month), +6.78% (3 Month), +10.14% (6 Month), +14.77% (1 Year)
*How to use these numbers: If on April 1, 2020 the value of a condo in Toronto was $600,000, it would be worth $605,880 on April 30, 2020 based on the Toronto home price index (HPI). That $600,000 condo appreciated $5,880 in April or $196 per day.
Prepared by Michael De Luca, Real Estate Sales Representative at Private Service Realty (PSR), Brokerage
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