Home sales in the Toronto region posted double digit gains in October, but, as an economist with Central 1 Credit Union points out, the pace of sales appears to be decelerating after the frenzied summer period.
Writing in a market brief, Regional Economist Edgard Navarrete said that while the annual gains for the Toronto market were robust, sales on a month-to-month basis declined by over 13 percent.
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According to Navarrete, this represents the most significant monthly sales contraction since April, when the pandemic froze the Toronto market in place. It also marks an end to five consecutive months of sales growth.
“While all year-over-year metrics are up significantly, by double digits, the month-over-month trend paints a different picture. It shows a market that could be slowing down significantly after the summer frenzy fueled by pent up demand and low mortgage rates,” wrote the economist.
Even with the sales slowdown from September to October, 2020 is still blowing 2019 out of the water when it comes to market activity. Navarrete noted that last month exceeded October 2019’s sales total by 24 percent.
That said, the economist believes the dip in sales should be followed closely to ascertain whether it’s merely a blip or the beginning of a new trend.
“Perhaps sufficiently enough people have entered that market that activity will be muted in the resale market for the rest of the year,” Navarrete said, alluding to the idea that pent-up demand held over from the spring has been exhausted over the exceptionally busy summer and early fall months.
He went on to speculate that as home prices continued to rapidly rise through the summer, prospective buyers erred on the side of caution, wary of risking their financial stability during an economically fraught period.
Other industry commentators do not share Navarrete’s cautious market outlook. Toronto Regional Real Estate Board Chief Market Analyst Jason Mercer said the board expects record or near-record breaking home sales for the remainder of 2020.
RBC Senior Economist Robert Hogue said he saw “little in the way of a material cooling” in home buying activity in October’s data. Instead, he focused on the divergence between the red hot detached home market segment and the downtown condo segment, where new listings are soaring.