Investment Property Toronto Review & Outlook: Summer / Fall 2020
With the momentum we saw in June, we expected July to be a strong one and it did not disappoint:
- Buyers and sellers are still playing catch up after the COVID-19 market freeze. On top of this, most people are staying in town which is different from normal years. So, we saw stronger than normal activity for July 2020.
- Banks are increasing their risk appetite: We continue to see dropping mortgage rates and improving investment mortgage programs, which are encouraging more buyers to enter the market.
Freeholds A Sellers Market, Condos A Buyers Market
The sales and listings for freeholds are moving in line with each other, so the market for detached houses and semis remain strong and steady. On the other hand, condos went from a sellers market this time last year to currently a condo buyers market because of a much higher spike in inventory.
Detached:
July 2019 Sales To Listings
59%
Detached:
July 2020 Sales To Listings
61%
Detached: Environment
Sellers Market
Semis:
July 2019 Sales To Listings
78%
Semis:
July 2020 Sales To Listings
80%
Semis: Environment
Sellers Market
Condos:
July 2019 Sales To Listings
67%
Condos:
July 2020 Sales To Listings
42%
Condos: Environment
Buyers Market
Prices Holding Relatively Stable
Detached house and semi prices are holding stable compared to pre COVID levels, with detached houses even reaching all time highs this month. Condo prices are still somewhat stable despite being a buyers market, as low interest rates give condo owners better holding power.
Detached:
July 2019 Price
$1,485,304
Detached:
July 2020 Price
$1,541,003
Detached: Change
+3.8%
Semis:
July 2019 Price
$1,208,073
Semis:
July 2020 Price
$1,181,014
Semis: Change
-2.2%
Condos:
July 2019 Price
$722,675
Condos:
July 2020 Price
$682,999
Condos: Change
-5.5%
Condos Seeing Higher Inventory Vs. Everything Else
Even with buyers and sellers re-entering the market, freehold sales and listings between April to July are still down year-on-year, which is keeping markets stable. Condo sales are also following a similar trend. The main reason for the changing condo buyers market come from a higher number of listings as condo owners attempt to exit the condo market:
- OREA’s latest monthly Pulse Check on Consumer Attitudes tells us that people are now wanting more space, a background, and less density so there’s a shift from condos to houses.
- Condo investors are taking profit because they are facing negative cash flows from higher vacancies and lower rents.
Detached:
Apr - Jul 2019
Sales: 4,023 Listings: 7,952
Detached:
Apr - Jul 2020
Sales: 2,741 Listings: 5,124
Detached: Change
Sales: -32% Listings: -36%
Semis:
Apr - Jul 2019
Sales: 1,298 Listings: 1,870
Semis: Apr - Jul 2020 July 2020
Sales: 925
Listings: 1,348
Semis: Change
Sales: -29% Listings: -28%
Condos:
Apr - Jul 2019
Sales: 6,461 Listings: 10,200
Condos:
Apr - Jul 2020
Sales: 4,185 Listings: 10,734
Condos: Change
Sales: -35% Listings: +5%
What To Expect This Fall
Sales activity may slow down before schools resume in September, but we anticipate the freehold markets to remain strong in the fall. The main reason for this is because freeholds sales and listings volume are still lower from April to July year-on-year, so we expect more catch up from both buyers and sellers.
On the other hand, higher inventory in condos will remain an issue until immigration bounces back, workers head back to their offices, and international students resume in person classes. This means a persistent condo buyers market in the short term.
