If nothing else 2020 has been consistent. Much like warm beer, cold french fries and wet hockey equipment 2020 has been a consistent drag, providing humankind with repeated blows to the nether regions. 2020 has also been a huge bummer for celebrity deaths, taking beloved icons like Alex Trebek, Sean Connery, Eddie Van Halen and the dude who played Deebo in Friday. But what 2020 has ultimately proved unequivocally is that the Toronto real estate market remains an unstoppable force.
2020 began full of hope and optimism. You could still actually get a haircut, have friends over for dinner and make an ass of yourself at a bar. The real estate market started out blazing too, just like every other year. The average GTA sale price for all home types in January was $838,087, which represented a 12% increase from January of 2019. The next month the average sale price shot up to $910,142, a massive month over month jump and suddenly in reach of the all time record month of $920,791 from April of 2017 (the now infamous month that led to the creation of the Fair Housing Plan).
Cut to March of this year, and then everything went to seed. We all unfortunately became familiar on a first hand basis with a global pandemic, and went into a lockdown on March 23rd. Schools closed across the province, and the fear became very real. People were afraid of the virus, afraid for elderly loved ones and afraid of losing their employment, to name just a few things. But in spite of all this, and the last week of the month being a full lockdown, March somehow closed out at $902,787.
In April things became dire. The Prime Minister began addressing the nation on a daily basis, and the government pledged billions in relief to help stave off financial ruin for millions of Canadians. In spite of real estate being declared an essential service after some initial debate, the average sale price plummeted to just $820,222, which represented an almost $100,000 drop from February. But what was most troubling was the drop in total sales. April is often the busiest month of the year, but this year we saw only 2,958 sales – a stunning 67% drop from the year before!
April became all about “surviving the day”. Parents were stuck trying to work (if they still could) and juggle childcare and homeschooling. Zoom parties became a thing. Sales of booze and pot hit record highs and Netflix became our best friend. In addition, many people were simply afraid to leave their home. And this is where the real estate market felt the pinch. In spite of the industry’s best efforts to “digitize” the process (virtual tours, buyer walkthroughs and cyber open houses) the vast majority of buyers were understandably not down with the notion of buying a house without actually being able to see it in person. They would rather wait, and the question we all had was for how long? How long would this current state of affairs go on for?
The answer for our industry was (thankfully) not very long, and by May things started to rebound. People started thinking about their real estate plans again, and started feeling safe enough to venture out for in-person showings (masks, gloves and hand sanitizer were and still are mandatory). The average sale price creeped up to $863,523 and total sales nearly doubled from April. We were cautiously optimistic, and it turned out we had good reason to be.
By June it was back to trying to take a sip of water out of a firehose. Drop it like it’s hot. June represented an all time record month at $831,882, meaning April of 2017 had finally been eclipsed. And guess what happened next? Another record month in July, then again in August and September until 2020 hit its peak in October at $968,162. To throw one final stat at you, that sale price represents a 14% spike from October of 2019.
So what to make of this surge, when so many other sectors have been virtually collapsing? I have a few thoughts.
I think the roughly 5 weeks of people self isolating created a pent up demand that we have rarely ever seen. Once people adapted to co-vid life and realized how to still work, (and realized that the world wasn’t going to end), the Spring market kicked off in May a couple of months later than usual. This Spring market fervour carried into the Summer and Fall and is only now waning as we enter the holiday season.
From a budget perspective it became evident early on that the pandemic was making it difficult to spend money. There would be no European Summer vacations or Christmas in Jamaica. For most of the year there have no expensive dinners to spend on, and most have saved significantly on things like gas. So why not grab that saved money and go all in on a house?
Co-vid undeniably accelerated certain societal behaviours. This is especially true with the shift to people working from home and using things like Zoom for meetings and conferences, which I believe will remain to some degree even when things get back to “normal”. If you are going to be spending more time at home you want to be comfortable. You want space, a pepper home office and a nice yard. For many the only way to get these things was to get a new house.
Further to the previous point, co-vid also accelerated condo owner’s plans to move up to a house. I spoke to many condo owners this past year and they often said they felt like “the walls were closing in on them” and it felt like living in a fishbowl. This feeling drove them to seek out a house which offers more space and a backyard with some grass.
Finally, it is my firm belief that in 2020 the market simply did what it was supposed to do. Toronto is a world class city and our real estate prices are going to increasingly reflect that. It’s hard to imagine anything more devastating than a deadly global pandemic, but even that only put a small and temporary chink in the Toronto real estate market. It’s hard to imagine what could ever stop this train.
So as we stumble towards 2021 in yet another lockdown, the question we all have is what will the next 12 months bring? I don’t profess to have the answer to that, but I certainly wouldn’t bet against the Toronto real estate market