For Toronto’s housing market, 2020 was a rollercoaster of a year to say the least.
The COVID-19 pandemic left nothing untouched as it altered every aspect of the market, from mortgage rates to how realtors could conduct business.
As the year draws to a close, we’re looking back at Livabl’s coverage of some of the biggest moments that will surely impact the Toronto real estate market for years to come.
Toronto housing prices were ready to take off
Low inventory coupled with high demand in the Toronto housing market created the perfect conditions for prices to skyrocket in early 2020. At the time, RBC Senior Economist Robert Hogue pointed to parallels between the current market conditions and those in 2017, when home prices peaked in the first half of the year and triggered significant government intervention at the provincial and federal levels as a result.
If the market tightness continued, Hogue predicted double-digit price gains for the Toronto market over the coming months. He was right, but likely not in the way he was expecting at the time.
The Bank of Canada responds as COVID-19 spreads quickly around the country
As the looming threat of the pandemic on the economy became clear, the Bank of Canada sprung into action in early March before lockdowns were rolled out across the country.
Some market experts anticipated in February that the central bank would decide to cut its mortgage rate-influencing overnight rate within a matter of months as 2019 ended on an economic low-note and the COVID-19 outbreak worsened. Weeks later, as the virus wreaked havoc on global markets, the Bank of Canada announced that it would cut the overnight rate by 50 basis points on March 4th, the first decrease since 2015.
Just over a week later, the BoC slashed the overnight rate by another 50 basis points to 0.75 percent, sending mortgage rates toward historic lows. By the end of March, the overnight rate was slashed for a third time to 0.25 percent with no sign of an increase on the horizon. The low mortgage rates brought about by these rate cuts would supercharge Toronto home sales in the months ahead.
Sales plunge as communities head into lockdown
As COVID-19 cases climbed across the province, Ontario declared a state of emergency on March 17th, quickly followed by the closure of non-essential businesses a few days later. Real estate services were permitted to operate with tight restrictions, while open houses and below-grade construction activities were banned province-wide.
The lockdown swiftly sent home sales on a downward spiral, with the Toronto Regional Real Estate Board (TRREB) posting a 16 percent year-over-year drop in sales during the second half of March. Sales continued to fall throughout April and May, with 67 percent and 53.7 percent annual declines recorded during those months.
Cresford condo projects enter receivership
Three luxury condo towers developed by Cresford Development Corporation entered receivership in late March, leaving hundreds of buyers and their deposits in limbo.
The Clover on Yonge, Halo Residences and 33 Yorkville were taken under management by PricewaterhouseCoopers (PwC), with all three of the towers sold out and under construction at the time of receivership. Approximately 1,805 buyers entered into purchase agreements for the towers, which collected $252 million in deposits, according to PwC. Concord Pacific has since acquired The Clover on Yonge, and Halo Residences on Yonge is in the midst of closing a deal with a new owner who could allow presale buyers to receive their deposits back.
Toronto’s market makes a summer comeback
As Ontario worked through its three-stage reopening plan, home sales quickly roared back to life fueled by pent-up demand from the lost spring market.
TRREB reported 8,701 home sales in the Toronto region for June, an 89 percent rise from May and a slight 1.4 percent decline from June 2019. Thanks to record-low mortgage rates and pent-up demand, sales continued to soar and break annual records as July saw a 30 percent year-over-year increase and August posted a 40 percent annual gain. Market strength was focused on single-family home properties in the 905 region, sparking discussion around a pandemic-inspired urban exodus to suburban and rural regions.
Homebuyer preferences shift and suburban markets explode
Closed condo amenities and widespread work-from-home policies had many Toronto buyers looking to the suburbs for new housing options this year.
Called the ‘urban exodus,’ many city dwellers went searching for more space and fewer neighbours outside of the City of Toronto. While the dynamic originated before the pandemic started, experts have noted that remote work and appealing interest rates have helped to accelerate the trend.
Urban condo market lags behind in recovery
With immigration at a standstill and many buyers directing their home search efforts outside of the city, the downtown condo market struggled to regain momentum even as other property types took off again.
Downtown condo rental markets became oversupplied as students stayed away from urban campuses, newcomer renters never arrived and tenants impacted by layoffs and furlough became less mobile. Meantime, tougher restrictions on short-term rentals and a massive decline in tourism meant Airbnb units were no longer a viable option for many property investors. Condo rental listings piled up and pushed rent prices down.
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Single-family homes in the ‘905’ Toronto region significantly outpaced condo sales during the course of the summer and into the fall. August, September and October saw annual sales increases of 50.6 percent, 54.7 percent and 33.9 percent, respectively, for detached homes. Meanwhile, condo sales in those months saw more modest increases of 10.9 percent, 14.6 percent and 2.2 percent, respectively. By November, the average price of a resale condo in the 416 declined from the previous year for the first time since the pandemic began.
The city gets several skyline and neighbourhood-altering new development proposals
Despite the sluggish resale condo market, Toronto developers proposed some interesting and controversial new condo developments in 2020.
From mega-tall high-rises to boutique rental buildings, many development applications were submitted to city planners. New applications were nearly non-existent during the spring lockdown months, but submissions quickly bounced back during the summer.
Toronto enters a second lockdown, but 2021 offers hope for a return to normalcy
After a huge summer rebound that carried well into fall, concerns over the housing market’s resiliency returned as the city entered another lockdown in November under the province’s new colour-coded COVID response system.
There is hope that 2021 will bring a downtown condo market recovery and an overall return to normalcy, thanks to increased immigration targets by the federal government and the newly-approved Pfizer vaccine that’s promising to bring us all closer to our pre-pandemic lifestyles.