With a year of COVID officially behind us, a sense of confidence has returned to the housing market, and for the third straight month in a row, record home sales continued across the Greater Toronto Area (GTA), as buyers took advantage of low borrowing costs and continued improvement in many sectors of the economy.
Last month, 15,652 home sales were recorded throughout the GTA, a staggering 97% increase from the 7,945 homes sold in March 2020. This was bolstered by 7,577 detached home sales throughout the region, according to the latest data from the Toronto Regional Real Estate Board (TRREB).
“Confidence in economic recovery coupled with low borrowing costs supported a record pace of home sales last month," said TRREB President Lisa Patel.
"While the robust market activity is indicative of widespread consumer optimism, it is also shedding light on the sustained lack of inventory in the GTA housing market, with implications for affordability.”
And while last month's numbers are undoubtedly attention-grabbing, just remember where we were a year ago -- a time when the initial impacts of COVID began to be felt and sales activity dropped dramatically.
With this in mind, TRREB looked at annual sales growth for the pre-COVID period (March 1 to 14, 2020) and the COVID period (March 15 to 31, 2020). During the first 14 days of March 2021, 6,504 homes were sold -- a 41% increase from the pre-COVID period in March 2020.
In the second half of the month, there were 9,148 sales reported between March 15 and March 31, 2021, an increase of 174% compared to the COVID period of March 2020 -- serving as a stark reminder of the initial impact the pandemic had on the housing market and overall economy just a year ago.
For March as a whole, new listings were up 57% year-over-year to 22,709 -- and while this represents a strong year-over-year increase, the annual growth rate for new listings remains well-below that of sales.
"With sales growth outstripping listings growth by a large margin, including in the condo market segment, competition between buyers in some market segments and the potential for double-digit price growth could continue without a meaningful increase in the supply of homes available for sale," stressed TRREB Chief Market Analyst Jason Mercer, who added that this will become more apparent as population growth resumes over the next 12 months.
During this same period, TRREB said the average selling price in the GTA reached $1,097,565 -- up 21.6% year-over-year from $902,787 -- with low-rise home sales in regions surrounding Toronto driving price growth.
As for what's to come, TRREB CEO John DiMichele said the current state of the market has reinvigorated discussions about potential demand-side policy interventions -- a discussion that's been ongoing for quite some time now.
"Policies focussed on demand, such as a capital gains tax on primary residences, can have a short-term impact, but can also be fraught with unintended consequences like further stifling the supply of listings," said DiMichele.
Though, the federal minister responsible for the housing portfolio has said his government will "not entertain" such a policy option, a move that DeMichele says is the right decision.
"We have been saying for too long now that policymakers must focus on the long-term goal of increasing housing supply in order to accommodate current and future demand,” added DiMichele.