Market Commentary by Barry Cohen

The Value of Sanctuary

2020 was proof positive of the value of sanctuary – especially at luxury price points -- in the GTA.

Three months of lockdown gave Torontonians a new perspective on their living space, sparking a serious uptick in everything from home improvement to housing sales. Efforts to jump start the economy, including the Bank of Canada dropping the overnight lending rate to .25 per cent, added fuel to the GTA housing market as five-year closed rates fell to under two per cent. With a limited supply of homes listed for sale overall and accelerating demand for freehold properties, the market rebounded with a vengeance.

Summer was the new spring, with July and August – traditionally slower months -- posting a 29.5 per cent and 40.3 per cent increase respectively in overall homebuying activity over the same period in 2019. September (up 42.3 per cent over 2019) and October (up 25.1 per cent over 2019) set new records for sales in Toronto Regional Real Estate Board (TRREB) history. While November sales were up 24.3 per cent, sales in December climbed 64 per cent over 2019 levels, making 2020 the third best year on record for the Toronto Regional Real Estate Board.

In the upper-end, freehold and condominium properties over $3 million topped 2017 peak levels in essentially nine months of real estate activity. One thousand and sixty-two homes changed hands in 2020, a 55.7 per cent increase over 2019, and up about one per cent over the 1,047 sales reported in 2017. The number of luxury properties sold at virtually every price point over $4, $5, $7.5, and $10 million also reported double-digit increases in 2020.

Uber-Luxe Home Sales in the Greater Toronto Area

Total Upper End Sales over $2 million (Total Freehold)

2020 2019 % Change

$2 million plus 3,649 2,295 59%

$3 million plus 1,064 683 56%

$5 million plus 180 125 44%

$7.5 million plus 43 23 87%

$10 million plus 16 11 45%

Source: Barry Cohen Homes, RE/MAX of Ontario-Atlantic Canada, Toronto Regional Real Estate Board and Torontomls.net

As we move into 2021, the residual impact of 2020 will linger. While the first of many shipments of the COVID-19 vaccine have arrived, cocooning will still be the norm for months, if not the year to come. Housing is expected to be on everyone’s radar as seller’s cash in on solid equity gains, particularly on freehold properties, and buyers reap the rewards of historically low interest rates that make the cost of borrowing significantly lower than one year ago.

Competition is expected to be fierce in the spring, with both buyers and sellers exceptionally active as they emerge from lockdown. Shortage of available listings and an influx of overseas buyers will further strain supply. As pressure mounts, average price appreciation is expected to accelerate, especially in Toronto’s hot pocket communities.

From an economic standpoint, the worst appears to be behind us. GDP growth in Ontario is set to climb 4.5 per cent in 2021. Unemployment levels should continue to fall as the economy ramps up (87 per cent of the job losses in the Toronto CMA had been recouped by November, 2020). Interest rates are expected to remain low for the foreseeable future as the Bank of Canada moves to stimulate the economy. Immigration will help to further bolster economic growth as the federal government sets new target rates of 401,000 in 2021, 411,000 in 2022, and 421,000 in 2023, with an estimated 50 per cent of immigrants expected to make Ontario their home.

While there are still valid concerns regarding overall health and well-being with heightened COVID-19 numbers across the country, and Stay-at-Home measures, cautious optimism exists as the distribution of vaccines begins to roll out across the country. While not expected to eradicate the coronavirus anytime soon, the vaccine does provide some much-needed assurances for the future.

The psychological impact of the pandemic has no doubt changed consumer homebuying patterns, with greater personal space moving front and centre. Economic fundamentals appear to be heading in the right direction. The combination of those two factors, with the promise of a vaccinated public, bodes well for the future of housing in the Greater Toronto Area. If you’re thinking of buying or selling a home and would like to strategize or just curious as to what your home is worth, please do not hesitate to reach out.

With best wishes for a healthy, happy and safe 2021,

Barry Cohen