Real Estate News

Toronto real estate hits another all time high in July

Image by Paul Brennan from Pixabay

The average home price rose to $943,710, according to the Toronto Regional Real Estate Board (TRREB). That is a 16.9 per cent year-over-year increase, and 5.5 per cent higher than the previous record from last month.

The new numbers were released just as Mortgage Professionals Canada (MPC) released a report suggesting most homeowners are not worried about COVID-19’s economic impact.

“A large majority of mortgage holders do not foresee any difficulty in making ongoing mortgage payments,” says MPC chief economist Will Dunning in a statement.

Dunning’s report, Rapidly Evolving Expectations In The Housing Industry, is the first in a series from the MPC that will track whether COVID-19 erodes Canadian homeowner or buyer confidence.

“What we have seen clearly is that the vast majority of home owners are not feeling a long-term financial impact related to COVID-19, and that potential home buyers are still very much in the market for a home, signs of which are being seen in regions across the country,” he wrote.

Dunning adds that COVID-19 will have a larger effect on the rental market, as the pandemic’s economic impact is more pervasive among younger demographics and people in lower-wage occupations.

Three per cent among respondents who do not hold a mortgage were laid off permanently during the COVID-19 pandemic. That figure drops down to one per cent among homeowners .

MORE REAL ESTATE BUYERS

But even non-home owners are gaining confidence, according to the MPC report; 14 per cent of respondents who don’t own a home say they will likely be purchasing in the coming year. That’s double the seven per cent of respondents who showed similar interest in a survey from 2019.

The leading motivation among those who expect to purchase a home within the next three years (whether they are already homeowners or not) is the need for space while spending more time at home.

“The increased desire to buy homes is only partially due to COVID-19,” Dunning writes in the report. “There is now more confidence that this is a good time to buy a home or condominium.”

TORONTO REAL ESTATE IN JULY

The Toronto real estate market can certainly boost homeowner confidence. On top of the soaring price, sales were at a record high for July: 11,081 homes were sold, which is 29.5 per cent more than July 2019 and 49.5 per cent higher than June 2020.

“Sales activity was extremely strong for the first full month of summer,” says TRREB president Lisa Patel in a statement. “Normally we would see sales dip in July relative to June as more households take vacation, especially with children out of school. This year, however, was different with pent-up demand from the COVID-19-related lull in April and May being satisfied in the summer.”

Low-interest rates and limited listings continue to drive demand in Toronto real estate. There was a huge hike in new listings in July — 24.7 per cent more year-over-year. But the total active listings were down 16.3 per cent since last year.

The demand for detached and semi-detached properties in the 416 area is chiefly responsible for the skyrocketing average home price. Detached homes in Toronto rose 25.5 per cent to an average of $1,541,003. Semi-detached properties climbed 20 per cent to $1,181,014. The average price growth for townhouses, condos and all property types in the 905 did not exceed 14 per cent.

THE COVID-19 IMPACT

The Canada Mortgage Housing Corporation’s market outlook expects house prices to decline sharply beginning in the fall.

The CMHC spring forecast suggested that the average home price in Toronto real estate could dip as low as $825,000 in the fall. They also suggest that the average price could go as low as $739,000 in 2021 before rebounding in 2022.

Reasons for the decline include unemployment, a decline in the rental and condo market, low immigration and mortgage holders who can no longer defer payments.

According to the MPC report, 25 per cent of mortgage holders see their property as an investment. Most mortgage holders (72 per cent) feel secure about being able to pay their mortgage. Only five per cent expect to have difficulty. But according to the Canadian Bankers Association, about 16 per cent among those with mortgages in bank portfolios have opted to defer their mortgages or skip payments. That amounts to 760,000 Canadians.


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