Toronto housing market could see prices rise 10% this year
Limited housing supply and strong demand will likely keep the Toronto housing market in strong seller’s territory through 2022. Move-up and move-over buyers continue to drive demand in the region, with single-detached home experiencing the greatest year-over-year price appreciation last year on a year-over-year basis, rising from $1,477,519 in 2020 to $1,710,304 in 2021 (+15.8%); followed by townhomes, which rose from $835,615 in 2020 to $935,015 in 2021 (+11.9%); and condos, which increased from $673,708 in 2020 to $709,602 in 2021 (+5.3%).
In fall of 2021, the condo market was experiencing the highest level of activity across all property types, which is anticipated to continue into 2022 due to higher levels of inventory available. Increasing employment and income levels, which are both likely to continue to rise post-COVID-19, will continue to be key factor in the growing real estate market.
The trend of inter-provincial migration emerged very early in the pandemic, and this is likely to continue through 2022. That being said, immigration rates in Toronto far outweigh the out-migration trend, putting further pressure on Toronto housing supply levels in 2022.
Average residential price in the Toronto housing market is anticipated to increase by 10 per cent in 2022.
Canadian Housing Market Outlook for 2022
From a national perspective, RE/MAX is anticipating steady price growth across the Canadian real estate market in 2022, with inter-provincial migration continuing to be a key driver of housing activity in many regions, based on surveys of RE/MAX brokers and agents, as reflected in the 2022 Canadian Housing Market Outlook Report. The ongoing housing supply shortage is likely to continue, putting upward pressure on prices. As a result of these factors, RE/MAX Canada estimates a 9.2-per-cent increase in average residential sales prices across the country*.
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“Based on feedback from our brokers and agents, the inter-provincial relocation trend that we began to see in the summer of 2020 still remains very strong and is expected to continue into 2022,” says Christopher Alexander, President, RE/MAX Canada. “Less-dense cities and neighbourhoods offer buyers the prospect of greater affordability, along with liveability factors such as more space. In order for these regions to retain these appealing qualities and their relative market balance, housing supply needs to be added. Without more homes and in the face of rising demand, there’s potential for conditions in these regions to shift further.”
Despite the global pandemic, many Canadians still feel confident in the real estate market. According to a Leger survey conducted on behalf of RE/MAX Canada, 49 per cent of respondents believe Canadian real estate will remain one of their best investment options in 2022 (59 per cent of homeowners vs. 34 per cent non-homeowners which included renters, those not looking buy, and those currently looking to purchase). Additionally, 49 per cent of respondents are confident the Canadian real estate market will remain steady next year.
“Canadians recognize the value and investment potential in their homes. However, market challenges such as rising prices and limited supply have impacted local markets from coast-to-coast, causing angst this past year among those looking to get into the market and those hoping to move up in it,” says Elton Ash, Executive Vice President, RE/MAX Canada. “Despite this, it’s encouraging to see that many are feeling confident in the housing market in 2022 and view Canadian real estate as a solid investment.”
Additional findings from the 2022 Canadian Housing Market Outlook Report
- Two-in-five Canadians trust their agent to advise them during the current real estate landscape (43 per cent)
- 23 per cent of Canadians now have a greater desire to build their own home or buy pre-construction
- 26 per cent of Canadians have the desire to purchase a home while mortgage rates remain low
- 62 per cent of Canadians currently own a home. This is higher among those ages 35+ (70 per cent) compared with Millennials, ages 18-34 (42 per cent)
- The majority of Canadians (72 per cent) said rising home prices did not impact their purchasing decisions in 2021.
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Buyers have returned to the Toronto housing market after a brief but dramatic decline in activity at the start of the pandemic. The lockdown measures that began in mid-March put an abrupt hold on what was primed to be a busy spring market, but this “pandemic pause” proved to be temporary. Activity resumed in May and June in what would be a delayed spring market. According to the RE/MAX Fall Market Outlook Report, Toronto is currently experiencing seller’s market conditions, with few listings in most areas, demand continuing to exceed supply, and low interest rates enticing more buyers into the market.
If you’re wondering where Toronto house prices may be headed this year, keep your neck craned upward. As long as the market continues to face an imbalance between high demand and low inventory levels, prices will remain strong. Based on these factors, a 5% increase in the average residential sale price is expected in the Toronto housing market for the remainder of 2020.
During the peak lockdown period, many Torontonians reassessed their living situations, with RE/MAX brokers reporting increased interest in homes near green space, with more yard space and separate entrances, as well as in properties near Lake Ontario or other bodies of water. According to a survey conducted by Leger on behalf of RE/MAX Canada, 32% of Canadians no longer want to live in large urban centres, and instead would opt for rural or suburban communities. Even with Canadians living in cities opting for more suburban/rural living, listings in Toronto continue to see multiple offers. So, while it’s clear that Canadians’ tastes have shifted, there is still huge demand for the popular Toronto housing market.
Ontario Real Estate Trends
What’s been happening across other Ontario real estate markets? With the province being one of the hardest-hit regions in Canada, markets such as Niagara, Mississauga and Kitchener-Waterloo experienced significant drops in activity. However, come June, they bounced back aggressively as economies began to reopen. With all of Ontario now in phase three of re-opening and consumers more comfortable engaging in the market, market activity in Ontario is expected to remain steady in the fall, with modest price increases of up to 6% in some regions.
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Canadian Housing Market Trends
Leading indicators from RE/MAX brokers and agents across Canada’s housing market point to a strong market for the remainder of 2020. According to the RE/MAX Fall Market Outlook Report, RE/MAX brokers suggest that the average residential sale price in Canada could increase by 4.6% during the remainder of the year. This is compared to the 3.7% increase that was predicted in late 2019.
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The pandemic has prompted many Canadians to reassess their living situations, with 32% preferring rural or suburban communities over their urban counterparts. This trend is stronger among Canadians under the age of 55 than those in the 55+ age group. Not only are Canadians more motivated to leave cities, but changes in work and life dynamics have also shifted their needs and wants for their homes. According to the survey, 44% of Canadians would like a home with more space for personal amenities, such as a pool, balcony or a large yard.
Canadians equally split on their confidence in the housing market
Canadians are almost equally split in their confidence in Canada’s real estate market, with 39% as confident as they were prior to the pandemic, and 37% slightly less confident. When it comes to the prospect of a second wave of COVID-19, 56% of Canadians who are feeling confident in Canada’s real estate market are still likely to buy or sell.
“The classically hot spring market that was pushed to the summer months due to the COVID-19 pandemic created a surprisingly strong market across Canada and across all market segments,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Looking ahead, government financial aid programs may be coming to an end in September, which could potentially impact future activity; however, the pent-up demand and low inventory dynamic may keep prices steady and bolster activity for the remainder of 2020. Overall, we are very confident in the long-term durability of the market.”
Additional highlights from the 2020 RE/MAX Fall Market Outlook Report Survey:
- 48% of Canadians would like to live closer to green spaces
- 48% of Canadians say it’s more important than ever to live in a community close to hospitals and clinics
- 33% of Canadians would like more square footage in their home and have realized they need more space
- 44% of Canadians want a home with more outdoor space and personal amenities (i.e. balcony, pool etc.)
About the 2020 RE/MAX Fall Market Outlook Report
The 2020 RE/MAX Fall Market Outlook Report includes data and insights supplied by RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments.
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Seller’s market expected in 2020, prices to increase 6%
RE/MAX is predicting the Toronto housing market will favour sellers in 2020, with average residential sale price increasing by six per cent next year, based on increased demand in the detached market, better employment rates and economic growth, as well as improved overall affordability in the Greater Toronto Area over the last three years.
The Toronto housing market sat in seller’s territory in 2019, and this trend is expected to continue next year. The rate of new construction in the city is too low to meet the increasing demands of Toronto’s quickly growing population, which continues to put pressure on the market.
Currently there are two months of inventory, and these conditions are expected to prevail in 2020. Move-up buyers will drive demand in 2020.
Growth of Toronto luxury housing market continued to thrive in 2019, with the sale of homes over $5 million rising by 8.5 per cent year-over-year. Growth in this property segment is expected to continue in 2020.
Interest rates and employment/income growth will have the greatest impact on the market in 2020.
Durham region and west Scarborough will be in high demand, which RE/MAX attributes to affordability, proximity to transit and easy access to employment in Toronto’s downtown core.
From a national perspective, RE/MAX anticipates a leveling out of the highs and lows that characterized the Canadian housing market in 2019, particularly in Vancouver and Toronto, as we move into 2020. Healthy price increases are expected, with an estimated 3.7-per-cent increase in the average national residential sales price, according to the RE/MAX 2020 Housing Market Outlook Report.
Most individual markets surveyed across Canada experienced moderate price increases year-over-year from 2018 to 2019. However, some regions in Ontario continue to experience higher-than-normal gains, including London (+10.7 per cent), Windsor (+11 per cent), Ottawa (+11.7 per cent) and Niagara (+12.9 per cent).
“Southern Ontario is witnessing some incredibly strong price appreciation, with many regions seeing double-digit gains,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Thanks to the region’s resilient economy, staggering population growth and relentless development, the 2020 market looks very optimistic.”
Toronto housing market to favour sellers in 2021, prices expected to rise 6%
The Toronto housing market is expected to be in seller’s favour in 2021, characterized by a persistent supply shortage and rising prices. Low inventory has been a common trend across many Ontario housing markets in 2020, putting upward pressure on prices. Indeed, the Toronto housing market saw average price rise to $918,883 in 2020 (Jan. 1-Oct. 31) compared to $819,832 in 2019 (Jan. 1-Dec. 31). Growing demand, low supply and rising prices are expected to impact activity and prices in 2021. Thus, the RE/MAX outlook for Toronto real estate is a 6% increase in average price to approximately $974,015 across all property types.
The Toronto housing market currently has two months of inventory. Housing supply levels continue to decline, and are not expected to improve in 2021, which may push average home prices up.
Who’s driving demand for Toronto real estate?
The Toronto housing market has experienced shifts in buyer demand prompted by economic factors, lifestyle changes and immigration in the wake of COVID-19. Toronto’s condo market is currently a buyer’s market, whereas the rest of the market favours sellers.
Given that remote work is a widely available option, many Toronto buyers have been choosing homes based on affordability, often outside of the city, versus being close to their place of work within the core. This migration outside of urban areas has been a common trend across many Canadian housing markets as well as regions abroad, as homebuyers seek more square footage and green space, and less density.
In 2021, the immigrant homebuyer is expected to drive market activity, which includes those coming to Toronto for education purposes, along with the expected influx of immigration from outside the country. Given this trend, condominiums will likely see the most activity in 2021, based on their affordability – particularly for first-time homebuyers.
Outside of the downtown core, the condominium market has been relatively balanced since the start of COVID-19, based on buyers looking for more space while still being mindful of budget.
Toronto’s luxury housing market remains largely unimpacted by COVID-19 and is driven by move-up buyers.
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