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Real Estate News

Toronto’s Red-Hot Real Estate Market Shows First Signs of Slowdown

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‘Bucking’ the regular seasonal trend, April home sales in the GTA declined 12.7% month-over-month with 13,663 sales recorded. However, GTA home sales still managed to set a new record for April and amounted to more than quadruple April 2020 sales — the first full month of the pandemic in 2020, according to the Toronto Regional Real Estate Board (TRREB).

The local board says new listings followed a similar path — declining 8.4% month-over-month. However, this is still more than triple the number of new listings reported in April 2020. And, compared to the ten-year new listings average from April 2010 to April 2019, the April 2021 new listings count was up by 18.3%.

“While sales remained very strong last month, many realtors noted a marked slowing in both the number of transactions and the number of new listings,” said TRREB President Lisa Patel, who added that, “it makes sense that we had a pullback in market activity compared to March.”

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“We’ve experienced a torrid pace of home sales since the summer of 2020 while seeing little in the way of population growth. We may be starting to exhaust the pool of potential buyers within the existing GTA population. Over the long term, sustained growth in sales requires sustained growth in population,” said Patel. 

Despite the slowdown in sales, the MLS Home Price Index Composite benchmark increased 17.8% year-over-year. At the same time, the Composite benchmark also rose on a monthly basis; though, the pace of monthly growth decelerated. 

The average selling price of $1,090,992 was up by 33% compared to April 2020 but was “basically flat” relative to March 2021, when the average selling price in the GTA reached $1,097,565. This was in contrast to most years in the past when the average selling price has increased between March and April.

April’s real estate activity was bolstered by detached home sales, which accounted for 6,516 of the month’s total, with the 905-area leading with 5,194 sales, while the 416-area accounted for 1,322. The average price of a detached home in the GTA reached $1,387,629 in April, up 41.3% year-over-year.

Condo apartment sales in the GTA accounted for 3,290 of the overall monthly total, while the average price of a condo apartment in the GTA reached an average price of $691,791 in April, up 19.6% year-over-year.

The region’s condo activity was led by Toronto, which recorded 2,277 transactions — a staggering 373.4% year-over-year increase (again, April 2020 is not the best measure of market activity).

TRREB Chief Market Analyst, Jason Mercer, says “low borrowing costs during COVID-19 clearly had an impact on the demand for and price of ownership housing.”

Mercer says while the pace of price growth could moderate in the coming months, home prices will likely continue on the upward trend.

“Renewed population growth over the next year coupled with a persistent lack of new inventory will underpin home price appreciation,” added Mercer.

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