A little update about real estate from our mortgage friend Sean Humphries:
“What’s going to happen with real estate prices in the near future? That’s The million dollar question. Or should I say, the $995,000 question, accepting offers on Tuesday.
The market is on hold right now. The number of properties available for sale in the market is down 64.1% from April 2019, as people are hibernating until further notice. As a result, the number of properties that have sold is also down by a similar percentage (-67.1%). Last April, there were over 9000 sales of all property types, this year there were just under 3000.
Since there are dramatic drops in housing sales, you might think that there would be similar drops in housing prices. But, April year-over-year prices were up 0.1% from 2019, which is essentially a rounding error. For the most part, listings that are available are still selling. Keep in mind that this metric is for all housing types including entry level condos to detached homes in prestigious neighbourhoods. Many of the top end properties are currently off the market and are not contributing to the pricing metric.
If you take a look at 2020 alone, we had an absolutely blistering start to the year. In February, year-over-year new listings were up 45% from 2019, sales were up 7.9% and prices were up an unsustainable 16.7%. The average home prices was up $130,000 from 2019!
Since the pandemic started, we’ve essentially given back all of that price appreciation for the year. For now, the market is selling at what homes would have sold last year. The March 2020 average selling price was $894,745 and in April that was down fairly substantially to $789,274.
Once life starts to return to normal and confidence grows, expect more listings and buyers to get back in the market and all housing types to return to normal levels. We may not go back to the same growth that we saw in early 2020, but price appreciation will return to normal levels.
In the short-term, you can expect prices for most housing types to remain flat from 2019.
Don’t expect a long run of depreciating prices back to “affordable” levels. Toronto is too big of a city with too much housing demand and not enough supply.
If you have any questions, please contact me anytime.
Stay safe Toronto!