According to the latest info from the Toronto Regional Real Estate Board (TRREB), the average price of a Toronto home in June was $930,869 – an all-time high that surpasses the previous record set three years ago.
That previous record, set in April 2017, peaked at $920,791, before stricter rules for mortgages and foreign buyers temporarily cooled the market down. According to TRREB’s latest report, prices were up across all housing types; however, detached properties were up 14% and semi-detached properties led the way by rising an astounding 22% – up to an average of $1,287,832.
Again, the average selling price of a semi-detached home in Toronto last month was just 12 grand short of $1.3M. Looking for a detached home? That average is now $1.52 million, up 14.3% y-o-y.
“Following the broader movement to reopen the economy in June, we experienced a very positive result in terms of home sales and selling prices,” said TRREB president Lisa Patel in a statement. “Before the onset of COVID-19, there was a great deal of pent-up demand in the market. This pent-up demand arguably increased further over the past three months.”
However, it is important, as John Pasalis, president of Realosophy, points out, to keep in mind that average prices pushing to a new record high very likely isn’t the “new normal,” rather it could easily represent a short term demand shock that was caused by the housing market nearly shutting down in its entirety for 2.5 months during the height of the pandemic.
I’m seeing far too much confidence in housing as a result of the strong sales and prices we have been seeing the past six weeks. People are misreading the data. The booming housing market is not proof that even 14% unemployment can’t keep Toronto housing down…
— John Pasalis (@JohnPasalis) July 7, 2020
As COVID unfolded and emergency orders were enacted, potential buyers stepped back to the sidelines, as did most of those planning on selling their homes. But now that Toronto is in the midst of Stage 2, people appear to be feeling more confident about looking for – and buying – properties again.
In fact, it’s clear that both buyers and sellers have enthusiastically resumed activity in the market, as is evident from the amount to which Toronto home sales rebounded in June, in turn helping to push the average price of a Toronto home to a new all-time high.
Pasalis compared this situation to what’s currently happening to hair salons: “Thousands of people need a haircut. Hair salons are booked till the end of August. It does not mean that this level of demand is typical for the hair salon business – it is a demand shock caused by COVID.”
Pasalis expects the same thing will happen for the Toronto housing market. As more buyers and sellers return to the market, prices could potentially continue increasing through July.
It is impossible to say right now whether or not the current demand in the market will last. And with a looming “deferral cliff” combining with the end of CERB and the potential for millions of people to remain out of work, it would be difficult to conclude that the market won’t be affected. And yet, if you’d asked anyone three months ago (hell, even two months ago) if we’d be seeing this kind of competition by the end of June, you would have been hard pressed to find someone willing to bet the farm that we would be.
People have been waiting for the Toronto housing bubble to burst for years now. Nearly four full months into a pandemic that has left much of the world’s economy on its knees, it looks like they’re going to have to keep waiting.