The Greater Toronto Area’s condominium market moderated in 2020, but does that tell the whole story? Absolutely not.
While sales declined by 5% compared to 2019, according to the Toronto Regional Real Estate Board (TRREB), prices actually increased by 7.1%. In the 416 and 905, prices rose by 6.3% and 10.2%, respectively.
December proved a record-breaking month for the GTA’s condo sector, as sales increased by 75.4% year-over-year. The average price of a condo, however, fell by 2%.
In the City of Toronto, condo sales surged by 75.9% during the same period, while the average price declined by 4.7%. In the 905, sales shot up 74.5% and the average price increased by 6.3%.
The condo segment of the GTA’s housing market experienced a lot of turbulence last year. Through the first five months of 2020, sales plunged by 28.1% compared to the January-May period of 2019, yet the average price actually increased by 12.1%. To call that a major departure from the fundamental laws of supply and demand would be an understatement, so what explains the rise in valuations?
According to TRREB’s analysis of the market in May, one- and two-bedroom condo rental transactions respectively declined by 30.8% and 26.7% on an annual basis, but they nearly doubled from a month earlier.
“The number of one-bedroom rentals, at 1,290, was well above the 754 mark for April,” said a TRREB statement from June. “Similarly, the number of two-bedroom rentals, at 820, was well above the 489 rentals reported for April.”
The data indicate that renters—a cohort who, not long before, had found themselves in bidding wars, sometimes having to pay hundreds of dollars more a month because the city’s vacancy rate hovered around 1%—took advantage of slightly lower rental rates. In other words, while some condo residents vacated their units, others who’d been waiting patiently pounced.
By December, sales were surging again and the condo sector was beginning to look like its old self, signifying strong confidence in the market segment going forward. Even more importantly, it demonstrates resolute faith that the GTA’s market fundamentals aren’t mere smoke and mirrors, as well as a tacit understanding that the sudden, unprecedented job losses were artificial.
Additionally, more expensive ground-related homes sold like hotcakes, which further indicates that a significant number of Torontonians weren’t as hard hit by the pandemic as perhaps originally thought. It stands to reason, then, that the GTA’s market fundamentals are a lot stronger than anyone thought.
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