Despite all that COVID has thrown at us, by all measures we saw another very strong month for GTA real estate. This activity isn’t unique to Southern Ontario either, as logic continues to be defied Canada-wide. Halifax and Hamilton were leading the charge in month-over-month gains for March by the way.
Let’s begin with sales volume. We know COVID hit us mid-March of last year, so we can assume that even with a normal level of activity, we’d be busier this year than last. Tellingly, there was 97% more sales activity in March 2021 than in Mar 2020. Every single TRREB region posted gains, ranging from 32% to 230%; and the 416 was 86%, the 905 at 103%.
Since we know last year was quiet, what’s really interesting is that we notably surpassed our competition (also known as the hot market of early 2017) and almost doubled the volume of sales of both 2018 and 2019. What’s also interesting is that sales volume continues to build on itself this year. Sales volume was up 58.3% from January to February, and then a further 42.7% from February to March. It begs the question, how much more activity can we possibly see?
Overall, TRREB average price across all property types/territories exceeded $1,000,000 for the second month in a row. March 2021 average price came in at $1,097,565, up 21.6% vs. March 2020 ($902,787). This means that not only did we break the $1 million mark only a short month ago, but that we nearly broke the 1.1M mark only four weeks later. In terms of measuring the market’s performance in the longer-term, we’ve seen price growth averages of 11.8%/yr over 3 years, 9.8%/yr over 5 years, and 9.2%/yr over the last decade.
If we look at new listings and compare that to active listings, we see that new listings increased by 50% from February to March. The increase from 15,137 to 22,709 brings us to the second highest new listings on record. We are also up 57.3% from March 2020. Active listings were also up, but not enough to keep up with demand, which means we are not building inventory. Anything coming to market is getting scooped up.
As we’ve talked about this week in my Instagram stories, we need to start disregarding the articles that glorify something selling for X amount over asking. At this point the baseline is almost arbitrary. It makes for great stories but is of little substance. Particularly right now if we look at how far under agents are pricing properties these days, we see the list-to-average sale ratio is around 107% in March. This of course varies depending on the local market and type of home. Back in March 2017, we saw our all-time high of 111%, so we’ve seen this kind of tactic before. The difference is that it was a strategy more localized to Toronto, and now it’s everywhere.
What’s on the horizon? We know that there’s the potential for some mortgage interventions to impact the market. These are mortgages with 20% plus down or $1 million plus purchase price. These new measures would increase the stress test benchmark rate from 4.79% to 5.25%. The “Stress Test” rate is calculated as the greater of your actual mortgage rate +2.00% OR the Benchmark Rate. This should decrease an individual applicant’s buying power by approximately 4% or $40k purchase power on a million dollar purchase price. There are rumours of other government interventions such as eliminating the blind bidding process, but there are no major announcements or action plans at this point. For the time being, it looks like this runaway train shall continue.
Since they are now the norm, for more information on multiple offers and offer dates, check out this blog.
Photo by Eleanor Styles on Unsplash
