It’s been almost a year since the whispers of a flu-like virus from Wuhan started to enter our newscycles – soon to change our lives, and the real-estate market. Toronto continues to experience periodic lockdowns and many employers are permanently moving to a work from home model, leaving Torontonians to rethink their current living situations.
Rumours are swirling of Torontonians flocking to the suburbs, and condo sales dramatically declining, leaving potential buyers wondering what to believe and if now is a good time to invest.
In this article:
- Real estate trends impacting the current market
- Statistics of the current Toronto condo market
- Average condo prices for Toronto and surrounding suburbs
- Thought leaders weigh on the “Toronto condo bubble”
- Predictions of the 2021 Toronto condo market
Recent Trends That Impact the Toronto Condo Market
The COVID-19 pandemic has caused a lot of uncertainty, as well as fluctuation in the Toronto real estate market. Many media outlets are touting this period in time as the final burst of the Toronto condo bubble. Here are the trends impacting the Toronto condo market right now.
Investment Properties Are at a Standstill
The fall of short-term rentals such as AirBnB are adding more condo units to the market as COVID-19 put a halt to tourism and immigration. Students are now learning online so the student rental market has dried up. At the same time, the City of Toronto issued new stricter short-term rental bylaws that came into effect in September. The by-laws state that owners are only allowed to rent a part of their primary residence on short-term rental websites. This bylaw was developed in an attempt to slow down real-estate moguls from purchasing, then renting out several properties that were believed to have been driving up pricing and creating the Toronto condo bubble. All of these factors are causing many investors to try to quickly off-load their condo investments.
Millennials Moving to the Suburbs
Millennials, like the generations before them, are at the age of settling down, having families and making higher salaries. Trading in their condos for suburban homes was a trend that was happening before COVID-19 hit. The pandemic is thought to have rapidly exasperated this trend as millennials dream of having more space to quarantine in. In fact, the Financial Post reported that demand for micro-condos (units sized 500 square feet or less) were down 20 per cent in September 2020.
The Pandemic Created A Stronger Desire for Rural Living
Three in five people active in the real estate market are considering moving to a rural area because of the pandemic according to the June edition of The Ontario Real Estate Association’s Monthly Pulse Check on Consumer Attitudes. In August, Zoocasa estimated that the areas in greater Toronto that set new records in home prices were 30-60 minutes from the city centre such as commuter cities Ajax, Oshawa, Mississauga and Whitby. Median prices of single-family homes were up 27 per cent, while demand for downtown micro-condos were down 20 percent.
“We’ve seen a lot of anecdotal evidence since the summer that households are considering significant lifestyle changes by relocating to less-dense cities and neighbouhoods. This has sparked unprecedented sales this year in suburban and rural parts of Canada, and we expect this trend to continue in 2021.” said Christopher Alexander, Executive VP and Regional Director, RE/MAX of Ontario-Atlantic Canada.
The Condo Market in the Suburbs Surrounding Toronto
Early in the pandemic, condo sales across Toronto and the surrounding areas had declined by 21.6 percent from the same time in 2019 according to the Q2 report by the Toronto Regional Real Estate Board (TTREB). At the time, the pandemic had just hit, unemployment in Canada had reached double digits, and no one knew what the future of the pandemic had in store. While sales had declined, the condo apartment prices were still up 5.1 per cent for an average of $619,707.
But the summer months provided a glimpse of hope and return as new condominium apartment sales went up by 10.5 per cent from the same time in 2019. The average selling price was up by 9.3 per cent.
“The condominium apartment segment experienced the second best third quarter on record in terms of sales and the best third quarter on record in terms of average selling price,” states Lisa Patel, TREB President.
- The number of new condominium apartment listings were down 21.6 per cent in Q2 2020 compared to the year before.
- While the number of listings were down, the average selling price for a condo apartment was up 5.1 per cent compared to the year prior.
- The number of new condominium apartment sales were up 10.5 per cent from the same time in 2019.
- The average selling price was up by 9.3 per cent.
Toronto Condo Market To Date
Where does that leave Toronto’s condo market?
The City of Toronto had 12,954 new condo listings during Q3, but only 4,770 condos were sold. This can provide buyers more options and bargaining leverage. However, this did not impact the average price which still reached $680,000.
“While condo buyers certainly benefited from more choice in the third quarter compared to the past few years, there was still enough competition between buyers to support average selling prices substantially above last year’s levels,” shares Jason Mercer, TREB’s Chief Market Analyst.
Average Toronto Condo Prices
The average price for a Toronto condo continues to rise, despite there being more condos to choose from and less demand. With the job and real estate market in continuous flux, where can someone find the most affordable Toronto condos?
If you want to stay in the city, Toronto East maintains the lowest average condo prices at an average of $527K. For those willing to venture a little further, try Halton Hills, Brampton, Ajax, Uxbridge or Newmarket which offer condo apartments in the $400’s.
Oshawa remains the most affordable commuter city where buyers can still purchase condos for under $300K.
Average Condo Prices in Toronto and Surrounding Suburbs
City of Toronto
- Central: $749K
- West End: $601K
- East End: $527K
- Mississauga: $534K
- Brampton: $463K
- Whitchurch-Stouffville: $680K
- Vaughan: $602K
- King: $605K
- Markham: $587K
- Richmond Hill: $543K
- Aurora: $556K
- Scugog: $581K
- Whitby: $514K
- Uxbridge: $447K
- Ajax: $437K
- Clarington: $410K
- Oshawa: $298K
- Oakville: $642K
- Burlington: $529K
- Milton: $515K
- Halton Hills: $455K
Is Toronto at Risk of a Condo Bubble Correction?
Experts do predict a correction to Toronto’s housing bubble, but the rising prices during an economic downturn caused by the pandemic say otherwise.
UBS, a Swiss bank, added Toronto to a list of global cities at risk at being in a real estate bubble. Toronto was the only North American city to be included on the list. The report suggested Toronto housing is even more overpriced than Vancouver, New York, Los Angeles, and San Francisco. Not surprising considering the average price for Toronto condo has almost doubled in just 12 years.
Many experts thought the pandemic would burst that bubble. While listings for condos increased and demand for condos decreased, the average selling price increased regardless. The report suggested this won’t change in the future.
“Appreciation of the Canadian dollar will curb the appeal of Toronto’s property to foreign buyers when travel restrictions are lifted,” said UBS.
Toronto Condo Market Predictions for 2021
Fall 2020 is the Time To Buy
Some experts are saying that now is the time to find a deal as some investors are starting to experience “Covid fatigue” and are eager to off-load their properties.
2021 Housing Prices Expected to Rise
The 2021 Canadian Housing Market Outlet by RE/MAX Canada, estimates that prices are expected to continue rising in the city across all markets including condos.
The report reads that “the Toronto housing market is expected to be in the seller’s favour in 2021, characterized by a persistent supply shortage and rising prices.”
Vaccines Will Help With Buyer Confidence
Pfizer and BioNTech are showing promising results of their COVID-19 vaccine, but they will likely not be widely available until mid-2021. Some are predicting a third wave in spring 2021 which will again impact condo prices.