Have you heard? The Toronto spring real estate market is underway and its picking up steam at an uncomfortable pace. Several significant home sales with multiple offers and plenty of “bully offers” are flaring up in some hot pockets of the city and the surrounding 905 regions. Buyers have secured very attractive interest rates and the demand for space rather than speculation seem to be driving the market. It’s a concern among central bankers that this could be become a bubble with such low interest rates. On Wednesday, Canadian policy makers kept interest rates at 0.25%, and committed to keep borrowing costs low until the damage from the pandemic is fully repaired, something they don’t see happening until 2023.
Toronto’s vacancy rate on apartments hit 5.7% in the fourth quarter of 2020, the highest level the city has recorded in 50 years, after nearly a decade of being under 2%. As the pandemic pushed tenants outside the core of the city, the vacancy rate in the 905 areas surrounding Toronto remained at a much tighter 2%. These results are just an example to just how drastically the pandemic altered the rental market.
Despite the pandemic, Canadians continue to remain optimistic when it comes to the future and their finances. Many Canadians remain confident in their ability to save and continue to aspire to make their dream of owning a home a reality. This from a poll this week that RBC released titled Home Buying Sentiment Poll. Despite the negative implications COVID-19 has had on nearly every business sector, it appears the pandemic hasn’t had a lasting effect on the real estate industry as Canadians still believe in the strength of the housing market — despite growing concerns of the overall economy.
Toronto’s real estate market ended 2020 with a bang, as a December home-buying spree helped to push the average selling price to a record high of $929,699. After a steep drop in the spring due to the pandemic, the market took off in the second half of the year. The 13.5% increase over 2019’s average was led by single family homes where limited supply pushed prices up. The 905 areas outside Toronto saw the most pronounced price and sales gains. The number of homes sold in 2020 in the Greater Toronto Area totaled 95,151, up from 87,751 in 2019, and the third-best year on record.