Both Toronto's rental and condo markets continue to see robust activity, with both segments seeing notable growth in the third quarter, according to the Toronto Regional Real Estate Board (TRREB).
On Friday, TRREB released its Q3-2020 condominium market and rental market reports, revealing that sales for condo apartments in Canada's largest city were up 10.5% year-over-year, though new listings were up a staggering 84.6%. The rental market, on the other hand, saw growth of 30.2% over Q3 2019. That said, the number of condominium apartments listed for rent at some point during Q3-2020 was up a massive 113.9% compared to the same period last year, a result of many investors and Airbnb owners turning to the longterm rental market in an effort to cover ongoing costs.
When looking at the condo market, there was a total of 7,072 (1o.5%) transactions recorded in the third quarter by GTA realtors, while the number of new listings amounted to 17,613 (84.6%). Again, the trend for active listings at the end of Q3 remained the same; there were more than double reported than at the same time last year.
Despite the wave of inventory, the overall average condominium apartment selling price still managed to climb by 8.3% year-over-year in the third quarter to $633,484. This resulted in the condominium and apartment segment experiencing the second-best Q3 on record -- in terms of sales -- and the best third quarter on record for average selling price.
However, Toronto Regional Real Estate Board President Lisa Patel says while the pace of year-over-year condo sales and prices proved strong, they were still lower than what was reported for low-rise home types.
"The condo market became much better supplied as many investors moved to sell their units, due in part to softer rental market conditions and a short-term rental market that was impacted by stricter regulations and the COVID-19-related drop in tourism,” said Ms. Patel.
"Much better supplied," is a very nice way of saying the market has been flooded in recent months.
Locally, in Toronto, the average condo selling price hit $680,963, while TRREB said there was a total of 4,770 condo transactions recorded in Q3. New listings hit 12,954, while there were 5,423 active listings during this quarter.
“While condo buyers certainly benefitted from more choice in the third quarter compared to the past few years, there was still enough competition between buyers to support average selling prices substantially above last year’s levels," said Jason Mercer, TRREB’s Chief Market Analyst.
"It is important to note that one quarter does not make a trend, either on the demand or supply sides of the market. How the relationship unfolds between condo sales and listings over the next three to six months will dictate the longer-term direction for selling prices.”
Looking at the rental market, TRREB saw 14,036 condominium apartment rentals reported during the third quarter, the aforementioned 30.2% increase over the same quarter last year.
Patel says demand for condo rentals was "very strong" in the third quarter, with a record number of quarterly transactions reported. That said, 'strength' is not only defined by the number of transactions made, particularly as average rent prices continue to fall month after month, down a startling 16% in September year-over-year.
Ms. Patel comes close to admitting as much, adding: "... the number of units listed more than doubled compared to last year. Many investor-owners took their units out of the short-term rental market, due to stricter regulations and the COVID-19-related tourism downturn, and made them available in the traditional rental marketplace. The result was more choice and more negotiating power for renters.”
Meanwhile, Mercer notes that even if rental transaction numbers remain at or near record levels, it will still take some time for the added supply to be absorbed.
“Once we move into the post-COVID period, population growth from immigration and non-permanent residents will bolster rental demand and absorption,” added Mercer. Though, given the recent spike in COVID cases in Ontario, when this bolstering is expected to be allowed to resume is anyone's guess.
As a whole, average one-bedroom condominium apartment rent was down by 11.1% year-over-year in Q3-2020 to $2,012 (compared to $2,262 in Q3 2019). While the average two-bedroom condominium apartment rent was down by 9.2% over the same time period to $2,672 compared to $2,941 in the same quarter last year.