The housing industry was turned upside down in 2020. COVID-19 drastically changed the way people bought and sold real estate — they relied heavily on online tours and 360-degree walk-throughs to limit physical property visits, and in-person open houses were suspended for the most part. The pandemic also uprooted what’s usually a predictable real estate cycle, where spring is the hottest market of the four seasons, and altered the forecast for what was a super strong condo sector.
Over the course of the past 12 months, there has been much talk of housing statistics and for good reason — they are a good indicator of the health of the economy. However, the data is not always the easiest to digest. So, I’ve charted Toronto’s real estate numbers for 2020, as it’s important to understand where we came from to know where we are likely heading in 2021.
Sales were up 17.2% in Q1 last year, from Q1 2019, but plummeted 47% in Q2 2020 as the province went into lockdown to combat the first wave of the pandemic. When restrictions lifted, home sales surged and year-end sales were just 1.2% shy of 2019 levels.
New listings in the condo sector more than doubled from Q2 to Q3, as remote work (brought on by the pandemic) redefined what people want in a home — more square footage and private amenity/recreational space away from the potential risk of shared building facilities — and investor-owners moved to sell-off their units in light of the new short-term rental rules.
The gap between active single-family homes and condo apartment listings widened considerably in Q3, and stayed the course in Q4, as sales of single-family homes remained swift and strong, while condo units lingered on the market.
The average selling price for all home types (including condo apartments) combined was up in each quarter year-over-year. Prices peaked in Q3, increasing 18.7% from the same quarter in 2019, as Toronto’s real estate market rebounded after the brief yet steep drop-off in activity experienced in April and May, resulting in a summer market that looked more like the traditional spring selling season. By the end of 2020, prices settled, largely due to a weakening condo sector (see graph below), but were still on an upward trajectory, rising 6.6% from Q4 2019.
Average listing days on market (DOM) remained relatively constant throughout 2020 for single-family homes, dipping in Q3 as the market heated up due to pent-up demand from the first lockdown and limited inventory. Conversely, DOM rose relatively consistently for condo apartments, hitting a high of 26 days in Q4.
Single-family homes started off the year with 2 months of inventory (MOI), indicating a strong seller’s market. With demand for detached and semi-detached homes and townhouses exceedingly outstripping supply, the sector ended 2020 with just 1 MOI. This means that based on Toronto’s current state of sales activity, it would take just one month to completely sell the homes that are listed for sale, setting sellers up to expect multiple offers and continued price growth in 2021.
The condo sector was in an even better position at the start of 2020, with just 1.4 MOI, but the pandemic shifted it to a more balanced market beginning in April. However, MOI shrunk in December to 2 months, indicating a return to a seller’s market. Or is it? While sales significantly increased — up nearly 76% from December 2019 — many stale listings also expired or were terminated last month. So, it’s to be seen whether December’s MOI is an anomaly or an indication that the market is recovering and may return to its pre-pandemic heyday in 2021.
Despite the one ‘bad’ quarter in 2020, average home prices in Toronto climbed 11.6% year-over-year, just 1% shy of price gains made in 2017 — the height of the housing market prior to the introduction of new mortgage rules, which were introduced to cool things off.