Summer’s are usually hot with real estate activity in the GTA and southern Ontario, but last month was especially fiery.
Despite everything that’s happened, a 17% price increase was recorded. Furthermore, sales soared over 30% from July 2019. Home prices now average $943,710. As Tembo noted weeks ago, the trend toward low rise and more private homes in the exurbs, outer rim suburbs and rural areas is continuing and accelerating – prices jumped in Durham, Orangeville, and South Simcoe counties. Prices in these areas went up by 12.2% ,14%, and 14.1% respectively on average.
In these areas, detached homes and condo apartments were king when it comes to purchases. Meanwhile, in the downtown core, stats show that condo sales are starting to slow down. There was a 50% decline in condo sales recorded through the period of the COVID-19 pandemic. But even as sales of condos collapsed, prices remain high because of limited inventory, declines in building output, and an ongoing stream of buyers. Many owners who turned to rent out their units on Airbnb are now opting to sell because of closed borders, drying up immigration, and less travel. This shows that immigration, traditionally a pillar of real estate resilience, does not have to be high or on the up for prices and demand to be healthy.
With the Bank of Canada keeping rates steady and easing ‘Stress Tests’ requirements on homebuyers, the market has all the momentum and energy it needs with price signals in the green. The growth in activity also reaffirms that there is still ample foreign capital being invested into Canadian real estate for security and safety purposes. The good news will likely continue into August and September before losing some steam in fall and early winter. The big question remains how many homes will come on the market when government and banking measures to prop up mortgage payments dries up. It’s becoming clear that the Feds are eager to unwind the massive spending on COVID-19 relief and support that’s taken the federal debt up to over $1 trillion.
While effectively every region in Ontario is now in Stage 3 and given daily cases have been well under 100 for some time, we are likely to see more normalization in the coming weeks and months if the good news continues. Meanwhile, Ontario’s deficit has risen to just under $40 billion, with debt well over $400 billion. Additionally, Canada’s credit rating went down a notch given all the spending and higher debts we’ve seen. Good news in the real estate market will come at a cost at some point, and COVID-19’s after effects will remain with us for quite some time.