The Toronto and area resale market performed as expected in April. As reported in our March report, the implementation of the emergency lockdown measures had a crushing impact on the resale housing market. With most businesses closed and more than three million Canadians unemployed there was no reason to believe that the resale market would miraculously revive in April.
Sales dropped precipitously, declining by an unprecedented 67 percent compared to April 2019, to only 2,975 this year. Although, the decline is shocking, viewed from a different perspective it is amazing that the decline wasn’t worse. With businesses, restaurants and bars closed, with people being ordered to stay home by governments and health authorities, and with industry-wide restrictions on accessing properties, 2,975 reported sales are a testament to the strength and resilience of the Toronto resale market.
Two other aspects of the Toronto and area resale market also demonstrate its strength and resilience. Notwithstanding the sharp decline in sales, sale prices held firm in April. The average sale price came in at $821,392, slightly higher than the average sale price of $820,373 recorded last year. In the City of Toronto (416 trading districts) the average sale price came in at $881,424. The pre-March 15th average sale price for properties sold in the greater Toronto area was around $900,000, and somewhat higher for properties sold in the City of Toronto.
In addition to average sale prices holding firm, all properties sold in April only spent 19 days on the market, the exact number of days that properties spent on the market last April. Depending on housing type and location, the market was even faster. For example, semi-detached properties sold, on average, in only 13 days throughout the greater Toronto area, in 12 days in the City of Toronto, and in only 10 days in Toronto’s eastern districts. Most of these semidetached properties sold for more than their asking price.
Condominium apartments also sold very quickly, averaging only 18 days on market, including condominium apartment sales in Toronto’s central districts where almost 50 percent of all condominium apartment sales take place. Sale prices of condominium apartments in the City of Toronto were off by 4 percent compared to last April, no doubt a reflection of job losses affecting first-time buyers.
The more expensive end of the resale market was dramatically impacted by the emergency lockdown measures. Last year, 250 properties having a sale price of $2 Million or more were reported sold in April. This year that number fell to only 67, a decline of more than 73 percent. No doubt the dramatic decline of equity markets influenced buyers and sellers in this price category. By month-end, there was greater activity in property sales of $2 Million or more which can be expected to continue into May.
The emergency lockdown measures had an immediate, and not surprisingly impact on supply. In April, only 6,174 new properties came to market, a 64 percent decline compared to the 17,213 that came to the market last year. At month end there were only 10,561 properties available for sale. Even prior to the impact of Covid-19 the Toronto and area resale market suffered from a chronic shortage of inventory. That situation has now been further exasperated. Since many potential buyers are no longer in the market, the decline in inventory will not be immediately felt, but as businesses begin to open, and people get back to work and back into the market place, the already strained Toronto market place will become nightmarish for buyers.
Looking towards May we can anticipate a resale market not that dissimilar to April’s, but with modest improvement. Some of the provincial lockdown measures will be relaxed in May, with some businesses re-opening and many people returning to work. These changes are not likely to immediately impact the residential resale market. During the initial changes, people will proceed cautiously in the new normal, with a stronger resale market not expected until June.
Until then, stay safe!
Until the Ontario Provincial Government declared a state of emergency, the Toronto and area residential resale market was on course to produce one of the strongest, most robust markets on record, including the establishment of a record-breaking monthly average sale price. All that changed around the middle of the month as people began following provincial health authorities directives: stay home, maintain social distancing, no large gatherings, and of course, wash your hands frequently. When many of Ontario’s businesses were ordered closed, the real estate market didn’t stop but stalled dramatically.
Even with the collapse of the resale market in the second half of the month, March’s results were still substantially
stronger than March 2019. This March 8,012 residential properties were reported sold by Toronto and area realtors, a 12.3 percent increase compared to the 7,132 sales reported last year. Similarly, the average sale price for March came in at $902,680, almost matching April 2017’s record of $920,000. By comparison last March the average sale price came in at $788,133, 14.5 percent less than March 2020. What makes these numbers even more remarkable, is that all the properties that were reported sold took only 13 days (on average) to go from listing to sale.
What is so disappointing, particularly for buyers, is that March appeared to be the first month in some time when more much needed listings would come to market. Even with the halt in the market after March 15th, 14,424 properties came to market, a 3 percent increase compared to the 14,004 that came to market last year. In the second half of the month listings were being cancelled, suspended or moved from the multiple listing service to exclusive listings. By the end of the month, buyers were reluctant to visit properties as open houses became outlawed and real estate brokerages established rigid showing protocols.
In order to protect the health and safety of its clients, agents, staff and the greater community, Chestnut Park put into place rigid showing restrictions, only allowing the showing of properties in emergency or exceptional circumstances. But at the end of the day, March can be differentiated as the pre-COVID-19 and the post-COVID-19 markets. Effectively the date that demarcates these two markets is March 15. Here is what happened in those two markets.
1. During the first 15 days of March 4,643 properties were reported sold. This represented an eye-popping 58 percent increase compared to the number of sales recorded for the same period last March.
2. In the last half of the month 3,369 property sales were reported. This is a decrease of 15.9 percent compared to the same period last year. No doubt this is the most dramatic market change in the history of the Toronto and area resale market.
3. The average sale price for the entire month of March came in at $902,680. During the second half of the month the average sale price for all properties reported sold was only $862,563. During the first half of the month the average sale price was well over $1,000,000.
4. Even with the almost instantaneous change in market conditions after March 15, the average sale price for the city of Toronto still came in at $987,787, and that number included the reported sale of 1,402 condominium apartments which represented more than 50 percent of all reported sales in Toronto.
5. The average sale price for condominium apartments came in at $712,746 (city of Toronto) and average sale prices for condominium apartments in Toronto’s central core came in at $789,250. There is little doubt that without the abrupt change in Toronto’s condominium apartment market place, we would have witnessed a $800,000 plus average sale price for condominium apartments in Toronto’s central core.
So what does all this data tell us? Firstly, March’s numbers clearly indicate how strong the Toronto and area residential resale market is today. Even with everything that transpired, sales and average sale prices were still substantially stronger than March of 2019.
The data also indicates that when we have dealt with COVID-19 the market should rebound exponentially. We can only hope that we have enough available properties to meet the pent up demand. Secondly, the numbers for the second half of March point to a dismal April market. The slide that began after March 15 can not only be expected for April, but will likely be even more pronounced, given that we will only be hitting the virus’ peak late in the month. Please everyone, stay safe and follow the directions of the Province’s health authorities.
Prepared by Chris Kapches, President and CEO
