December 7, 2021

Toronto's Thriving Real Estate Market 2021

Chris Hamm

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The November market once again set new records with respect to the sales volume and the average sale price achieved for those properties. When looking at the year-over-year numbers we can see that, according to TRREB, the average sale price is now up by 21.8% with no signs of slowing down. A main contributing factor at play is the dramatic drop of supply that currently exists in the market, with new listings down by 13.8% year-over-year and double digit drops for both detached and condominiums. With extremely low supply and demand remaining high there is tremendous upward pressure placed on prices for the available inventory that will continue to result in the average price increasing as we enter 2022.

When focusing on the detached and condominium sales, which resulted in 42.8% and 31.8% respectively of the transacted volume in November we can see that there has been tremendous price increases for both segments of the market.

  • Detached average sale prices for November = $1,567,832 up 30.3% year-over-year
  • Condominium average sale prices for November = $715,014 up 18% year-over-year
  • Price gap in November between these market leaders = $852,728

Looking back at the October 2021 numbers, we can see that there was a price gap of $818,000 between detached and condominium sales. With the price gap now being stretched to $852,728 this gap has increased by $34,728 or 4.2% in just one months time. With detached home prices becoming increasingly more unattainable for many buyers, especially first time buyers, the condominium market will continue to benefit from this fact and will drive more buyers into the condominium market, which will result in even higher average sale prices for this segment of the market, especially as inventory remains low.  

If you are in the market for an investment property, now is the time to act. This is especially evident when you look at the current state of the market and how quickly it has rebounded, on both the rental and resale side over a relatively short period of time. Let me give you a quick update on what’s happening in the rental and resale condo markets.

There is no denying that 2020 was a painful year especially for those looking to lock in new tenants, however ever since the calendar turned to 2021 we have seen strong month-over-month gains to the point that we are quickly approaching a full recovery in the rental market. The added benefit of a new build property is the lack of rent controls in place that will ensure that you are receiving market rent year over year for your investment property.

Let me explain… that have never been occupied prior to November 2018 DO NOT fall under the Ontario rental increase guidelines. This means you can increase your rent as much as you want (assuming the tenant agrees, and if not they leave).

I will quickly break down for you the state of both the rental and resale markets, in order to provide you with as much detail as possible to help illustrate why buying now is absolutely the right decision. Beyond just market fundamentals, increase in pre-construction prices can be attributed to additional factors that are beyond developer controls, such as: land costs, material costs and labour. Additionally, the introduction of forward thinking technologies and amenity spaces that are designed to appeal to future residents will result in an increase in pricing for new suites.  

While new build prices are higher than resale, the newer technologies, designs and better finishes implemented into these new buildings make them more appealing to future owners and renters, thus ensuring that a rental and resale premium is achieved compared to existing buildings.

Rental Statistics

October rental numbers help to illustrate how strong the market has been in 2021 and why the market is poised to continue it's hot streak of month-over-month gains leading into 2022.

  • Condominium lease transactions totaled 2,876 suites in October, declining 17% year-over-year representing the lowest transaction volume in 16 months
  • Lease activity slowed due to the unit turnover declining. New listings in October dropped 54% from a year ago to 2,657, causing inventory levels to continue falling under 1 months of supply
  • Average transacted rents were $2,330 in October, edging up 0.2% month over-month and recording a 9% year-over-year increase
  • Rents in October were up 16% from the January low of $2,011 and were within 4% of the October 2019 high of $2,427

Quick Rental Analysis

The rental market has stabilized, we've seen a significant drop in unit turnover and listings hitting the market, resulting in months supply of suites dropping below 1 month of available inventory which therefore has caused and will continue to place upward pressure on rental values. Fewer suites available in the marketplace results in more competition for rental properties and thus we see rental figures increasing and inching closer to the rental high of October 2019….and my guess is soon surpassing them once we open back up for business in 2022.

Resale Statistics

The resale condominium market is very similar to the rental market in that the year-over-year increases are very strong and we are steadily seeing a decline in available inventory. This again will continue to place upward pressure on prices as fewer and fewer properties are being made available and resulting in the return of multiple offer situations.

  • Resale condominium activity reached an October record of 2,889 sales, increasing 29% year-over-year and surpassing a 10 year average of 2,185 sales by 33%
  • October sales increased by 9% over September to reach a 6 month high
  • Active condo resale listings dropped 55% year-over-year, as inventory declined to 1.2 months of supply from 3.4months a year ago
  • Average resale prices increased 13% annually in October to $703,968, with city of Toronto prices up 10.6% to $739,647 and 905 prices up 17% to $633,951.

Quick Resale Analysis

The value of condominiums relative to the rest of the GTA housing market has never looked better from an affordability perspective. In September 2021, the gap between average resale prices for detached houses and condominiums grew to a record high of just under $818,000 - increasing by almost 50% compared to a year ago. With detached prices becoming increasingly more unaffordable the best option for most is the condominium market and this has a trickle down effect to the rental market. With the cost of both detached and condominiums increasing year-over-year more will be priced out of the market and will be looking at rental opportunities as the most viable option.

The continued increase in pricing will result in couples and young families remaining in the rental space for a longer period of time, which as a byproduct will result in larger suites becoming more in demand to accommodate this growing demographic. As an investor it is key to know in which regions what unit type is the most in demand, so you can see the largest possible return on your investment.

Contact Me And Let's Discuss Your Investing Strategy

Investing is not a one size fits all strategy, we need to set a plan specifically for you in order to target the right markets and developments that fit with your investing goals. Additionally, an investing strategy will differ from market to market. In one market a studio may be a great investment opportunity, whereas in another 2-bedrooms may be more in demand and therefore provide you with a better return. It's important to know these details and I'd be happy to set up a time with you to discuss pre construction investing further.

Chris Hamm

(647) 375 2787

Sales Representative

Keller Williams Referred Urban Connect Realty, Brokerage

624 King St W, Toronto ON, M5V 1M7

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