Based on data released for April 2020 from the Toronto Real Estate Board
GTA Housing Market Remained in Balance during April
Summary Points
- April was the first full calendar month following the onset of the COVID-19 pandemic and lockdown, reporting total housing sales in the GTA that were three times lower than a year ago at 2,975 transactions. The 67% year-over-year plunge in sales was the steepest annual decline recorded over the last 23 years of available data back to 1997, resulting from physical distancing safety protocols introduced and a sudden economic shock caused by mass business closures. The health crisis-induced slowdown beginning during the second half of March followed a strong start to the year, with sales in January and February up 32% from 2019.
- New listings fell in lockstep with sales, declining 64% year-over-year. This helped keep active listings low as the market transitioned through an unprecedented period, with available supply at month-end down 41% from a year ago to 10,561 units — the lowest level of April active listings in more than 23 years. Nonetheless, the market became more balanced last month as the sales-to-new listings ratio declined to 48%, down from 52% in April 2019 but on par with April 2018. Active listings equalled 3.5 months of inventory, which was still considered balanced and well below the peak of 8.5 months reached during the previous recession in late 2018/early 2019.
- As demand and supply were fairly equally matched in April, homes sold in an average of 19 days, which was unchanged from a year ago. However, the average sale price-to-list price ratio came down from 102.8% in March to 98.4% in April, which was also down from last April (99.4%). With sale prices negotiated lower in more instances, average prices in April came down by 9% from March to $821,392, which was back to the April 2019 level ($820,373). However, a lot of the decline was attributable to a compositional shift in activity from higher-priced to lower-priced homes, which is typically the case during the initial stages of a market slowdown. Median prices, which limit some of the compositional effect, were down 6.7% month-over-month but up 3.2% year-over-year.
Summary Charts for April 2020
Demand Indicators
Supply Indicators
Price Indicators
Semis/Rows/Towns Outperform Detached Homes and Condo Apartments
- All housing types experienced sharp declines in sales during April, led by condo apartments (-72%) and followed by the detached segment (-66%) and the semi/row/town category (-64%). In the pre-COVID-19 period, the sales trend was strengthening the most for detached and semi/row/town homes. Inventory levels were highest for detached homes at 4.3 months of supply, which were also highest among housing types in the pre-COVID-19 period (1.7 in March). Inventory saw the largest jump for condo apartments, rising from 1.1 months in March to 3.8 months in April — the highest level of supply for the condo resale market since January 2015. The market remained tightest for semis/rows/towns, which saw only a modest increase in inventory from 0.9 to 2.1 months of supply.
- With inventory remaining low for semis/rows/towns, average prices for the category continued to grow on annual basis — up 5.6% year-over-year in April to $751,257 (off 3.7% from the March average). Average detached prices fell below $1 million for the first time since August 2019, declining 3.5% year-over-year. The annual decline for condo apartments was milder at 1.7%, marking the first time since 2013 that average condo prices were down on an annual basis.
Sales Shift to Detached Homes under $900K and Condos under $500K
- There was a substantial shift in sales activity between March and April from higher-priced homes to lower-priced homes. In the detached market, the share of sales increased for all homes selling for below $900,000, and decreased for all homes selling for $900,000 or more. The largest gain in share for detached homes was within the $700-799K range, and the largest decline in share was in the $1-1.24 million range. For condo apartments, the share of sales under $500,000 surged from 22% in March to 36% in April, with the share of sales in the $500-599K range holding steady and falling for units selling for $600,000 or more. The steepest decline in share occurred for units priced at $1 million or more.
Inventory Highest in Central Toronto and Lowest in Toronto East
The shift in distribution towards lower-priced detached homes was visible in the month-over-month change in median prices by region. The most expensive 905 markets of Halton Region and York Region saw median prices decline by double-digits, while milder declines of 6% were
experienced by the more affordable Peel and Durham Regions. Within Toronto, median prices held fairly steady for detached homes in Central Toronto (-1.7% from March) at $1.8 million. However, condo apartment declines in median prices were among the strongest in Central Toronto (-10.5%), which is the highest priced market for condos. In terms of inventory, supply was highest for detached homes and condo apartments in Central Toronto and York Region, and lowest in Toronto East.
Key Takeaways
The annual change in sales volume caused by the COVID-19 pandemic resulted in headline grabbing declines. However, the underlying liquidity for the much more limited number of homes available for sale in the post-COVID-19 period characterized a market that remained in balance, with homes continuing to sell in less than three weeks and for close to asking price. Well-priced properties in highly coveted locations often reported multiple offers, with a strong shift in activity to less expensive properties. This illustrates the degree of pent-up demand for affordably priced ownership housing accumulated heading into COVID-19, and the fact that a large proportion of buyers have been unaffected in terms of their employment and income situations. The steepest job losses have been focused on younger hourly workers, with higher-paying salaried positions experiencing more mild declines thus far. Part of the stability in the market can also be attributed to the unprecedented amount of fiscal and monetary stimulus introduced, which has reduced borrowing costs, maintained lending facilities, and provided income support and mortgage payment deferrals. To the extent that these policies remain in place until the health crisis is put under control and the economy sees a larger reopening, they should help to support sales growth. In the first half of May, weekly sales trends were indicating an improvement in activity to the highest levels since the lockdown began.
There are risks, of course, that highly leveraged households will face longer-term financial challenges, which may result in more motivated sellers in the future. At this point, most of the weakness in the market has materialized for condo rentals, as job losses and reduced immigration have occurred as completions are growing and more units are being added to the market by investors, including those previously used as Airbnb’s. This will have an impact on the willingness of investors to continue buying pre-construction condos at inflated values, which is a key reason for developers to withhold new launches in the current environment.
Source: Royal LePage Signature Realty