Ivan Kalinin is the perfect realtor to make a prediction for this week’s question for the simple reason that he doesn’t want to make one.
The Zoocasa realtor, who’s part of Key Toronto Real Estate Group, approaches everything he does with measured and thoughtful consideration, which is exactly what you want if you’re his client.
His understanding of market nuance and his commitment to subtlety are just two of the reasons he refuses to paint the entire Toronto market with the same brush, hence why his opinion is a valuable one.
Given its record-breaking summer, what's in store for the Fall real estate market in Toronto?
Nobody has a crystal ball. The market is extremely hard to predict, especially this year, as we've seen. Spring was supposed to be a complete, crazy experience for everyone and it was, until COVID-19 hit in March, and then everything went into a lull for about two or three weeks.
Then, you could see investors coming back in the market at first, driving the prices up a little bit. By July, we were 17% higher than July 2019.
It's been a very busy couple of months.
However, while many listings are selling very fast and often for over-asking, not all listings are doing so. For example, downtown condos, many of which are owned by investors (especially in buildings that have allowed AirBnb) have not had a particularly strong summer. Their average stay on the market before being sold is exceeding one month -- this never happened before. For years, it has been strange to see a downtown condo unit sit on the market for even two weeks, let alone approach a month, so prices started reflecting that hesitation in the market and they began to drop a little.
Currently, residential freeholds are selling very well: receiving multiple offers, going for over asking, and even being sold for over market value. Commercial markets, though, are not doing very well, while rental markets aren't faring much better. Looking at all of this disparity across the market, it's hard to pinpoint where the fall season will take it. Anecdotally, however, it's worth pointing out that none of my clients lost their jobs through COVID.
The big scare during COVID was that the resell and preconstruction markets would crash. Well, that didn’t happen, and one of the main reasons for that was many of the buyers who drive the demand in both of those sectors didn't lose their jobs as a result of the pandemic. On the other hand, many people in the rental market did lose their jobs and it’s easy to see how that has affected the rental market -- average rents in the GTA have fallen for eight straight months now.
Prices went up so fast in the summer (average home prices jumped 20% year-over-year in August alone) that I wouldn’t be surprised if they levelled off in the fall. I don’t think they’re necessarily going to go down, but they will probably level off due to the fact there are generally more listings after the second week of September. The kids are back to school, it’s much easier to do business, everyone is back to work and the world is already resembling a sense of normalcy -- minus the masks. I don’t think prices are going to go as high every month, like they did in July. July saw a huge spike due to pent up demand.
Prices will likely still increase, but only relative to what they are now, because the demand in Toronto is amazing. It’s incredible how in two weeks everyone reacts to the most recent news to the point where everything goes up by almost 20 points.
In the end, the demand is still there for resale. And as soon as any of the currently discounted condos are off the market, I think condo prices will also go up again.