Canada’s largest housing market got off to a roaring start this year, as Toronto home sales continued to surge in January, led by activity in the condo market.
Greater Toronto Area (GTA) home sales jumped 52.4 per cent year-over-year in the month, as 6,928 homes traded hands, according to data from the Toronto Regional Real Estate Board (TRREB). The average selling price for all homes sold in the region in January rose 15.5 per cent to $967,885.
While sales activity in the condo market nearly doubled from a year earlier, up 85.5 per cent, there was some continued price weakness in the segment as average selling prices fell 4.7 per cent in the month. However, TRREB highlighted that sales growth in that category is outstripping listings growth, which could support a price rebound if those conditions persist.
In contrast, there was no slowing down demand for detached homes, where sales volumes rose 34.4 per cent and average prices were up 31.2 per cent year-over-year in January. The detached segment has proven extremely resilient during the pandemic, as city-dwellers in search of more square footage and a larger outdoor space helped support demand.
Though that rise in demand and impact of rock-bottom interest rates helped fuel the boom in prices, that rapid appreciation has some in the industry concerned that growth may be unsustainable.
In an interview, Realosophy President John Pasalis said policymakers will need to keep a close eye on the situation to ensure things don’t spiral out of control.
“I think there’s a tension. Obviously we don’t want to kill the housing market, but at what point are policymakers overstimulating it? Certainly, 30 per cent price growth is not a positive thing,” he said.
“Policymakers, obviously their role is to mitigate the ups and downs of the business cycle but when we’re overstimulating, it is potentially just going to lead to problems down the road when we’re bidding up house prices higher than they otherwise should be.”
While 2020 was a turbulent year overall in the region’s real estate market due to the pandemic, TRREB is expecting continued double-digit price growth for the immediate future. In a release, TRREB Chief Market Analyst Jason Mercer said an economic resurgence post-vaccine and supportive demographic trends will likely push prices higher, with TRREB expecting average home prices will eclipse the $1-million mark for the first time ever in 2021.
“The pandemic certainly resulted in an unprecedented year for real estate in 2020, but it hasn’t put a damper on the overall demand,” he said. “Looking ahead, a strengthening economy and renewed GTA population growth following widespread vaccinations will support the continued demand for both ownership and rental housing. But over the long run, the supply of listings will remain an issue, particularly in low-rise segments.”