Bosley Real Estate Market Insight - November 20th, 2020
UPDATE FOR THE WEEK ENDING NOVEMBER 20TH, 2020
Toronto Condo Prices Down 9% from Peak - Recent news articles about Toronto’s condo market range from pessimistic to optimistic leaving many wondering what exactly is happening. In early October condo listings surged 215% in downtown Toronto, while a couple of weeks later an article titled “Toronto condo prices rise over 8% even as new listings surge”.
Jason Mercer, chief market analyst with the TRREB is saying “there is still enough competition between buyers to support average selling prices substantially above last year’s levels.” While this is technically true, it leaves one with the impression that condo prices are trending up when in fact average condo prices have been trending down over the past seven months. To better understand how prices can be up over last year but still be trending down we’ll need to look at some data on the downtown Toronto condo market (the area south of Bloor between the DVP and Dufferin) since it’s the hardest hit area in the GTA.
Condo prices downtown were relatively steady during the first three quarters of 2019. The average price for a downtown condo in the third quarter of 2019 was $714K. But in the last quarter of 2019 and the first quarter of 2020 the market changed significantly. A sudden surge in demand coupled with very tight inventory resulted in a very competitive market which pushed average prices up to $820K in the first quarter of 2020, a $100K (15%) increase in just six months. Since then average condo prices downtown fell by 9% to just under $750K.
We typically don’t analyze changes in home prices or sales on a month over month or quarter over quarter basis. Real estate is a seasonal business, so we typically compare prices and sales against the same period last year. But the risk with only comparing home prices year over year is that it can sometimes give us a false impression of the market today. That’s why the statement below from Urbanation’s Shaun Hildebrand really captures what is happening in the condo market today:
“It’s very likely that by the first quarter of 2021 we could be in a situation where we see double digit year over year declines in average condo prices downtown, and that’s under a scenario where prices remain flat from where they are right now.”
Shaun’s prediction was not based on a forecast of the future, but a better understanding of where the market is today. Condo prices are already down 9% from their peak, and even if they remain flat for the next five months, we will see close to a double-digit year over year decline in downtown condo prices in the first quarter. The bigger question will be whether or not condo prices stay flat over the next five months or whether we will see more downward pressure on prices. (Move Smartly Report)
Bosley Real Estate Ltd. is a full-service boutique brokerage operating in Toronto, Muskoka, Niagara-on-the-Lake, Port Hope and Cambridge, Ontario since 1928. We have three centrally located offices in Toronto and over 250 sales representatives selling and leasing homes and condominiums in all the vibrant communities we work in. Our brand is well recognized internationally thanks to our unique affiliation with Leading Real Estate Companies of the World. Our sales teams meet weekly to discuss market conditions, trending topics, and anecdotes that more accurately reflect the true temperature of the real estate market.