June, 2020

Toronto Real Estate Market Update – May 2020

The residential resale market recovered dramatically from the lows experienced in April. In April only 2,975 properties were reported sold for the entire greater Toronto area. A typical April market would produce 9,000 plus sales. April’s decline compared to April 2019 was a shocking 67 percent.

In May the resale market demonstrated its resiliency, both as to average sale price, and recorded sales. In May 4,606 residential properties were reported sold. This represents a 55 percent improvement compared to April’s results. Although the improvement was dramatic, May’s results were 50 percent less than a typical May. Last year Toronto and area realtors reported 9,950 residential resales.

During the month of May the residential resale community adapted to the new in-person showing protocols – wearing masks, gloves, using hand sanitizers, and restricting the number of people during showings. In addition, realtors are now using various virtual viewing platforms that allow buyers to familiarize themselves with properties without viewing them in-person. Public and agent open houses were banned shortly after the implementation of the provincial emergency measures.

Notwithstanding the decline in sales, the Toronto and area average sale price has remained strong. Last May the average sale price was $838,248. This May it came in at $863,599, an increase of 3 percent. In the City of Toronto (area code 416) the average sale price was $955,273, 2 percent higher than the average sale price of $937,000 achieved in May of 2019. In the City of Toronto detached properties averaged $1,422,000, semi-detached came in at $1,143,000 (9 percent higher than last year’s prices) and condominium apartments came in at $674,000, 5 percent higher than last year. In Toronto’s central core, the average sale price for condominium apartments was $740,000.

What was a problem even prior to the implementation of the emergency measures in March, has been accentuated in April and May: namely, a lack of supply. Last year there were 20,017 properties available for buyers to inspect and purchase. This May the available supply has dwindled to only 11,448 properties, a 42 percent decline. In April there were only a little more than 10,000 available Toronto and area properties for buyers. In a healthy, balanced market there should be no fewer than 25,000 properties in inventory. The lack of supply is, of course, responsible for the strong resale prices. New listings coming to market were down by over 53 percent in May.

Not all sectors of the market place were performing equally in May. In particular the higher end of the market was sluggish. Higher end property sales are not driven by necessity to the degree that lower priced properties are, and given the collapse of the equity markets (now recovering), only a handful of the reported sales were in this category. Last May 292 properties having a sale price of $2 Million or more were reported sold. This year only 132 properties in this price point were sold, a decline of 55 percent. In April only 67 properties sold in this category.

It is interesting to examine very early numbers for June, particularly in the City of Toronto. In May, on average, 50 properties were reported sold on a daily basis. In the first 4 days of June, the number of properties reported sold on daily basis has increased to 93. If this pace continues we could see close to 3,000 reported sales in June for the City of Toronto, not dissimilar to the historic averages for June.

June’s early numbers clearly indicate that the resale market has been incrementally improving, almost on a daily basis since early April. As the emergency measures are relaxed, and more businesses are allowed to open up, resulting in people returning to work, these incremental measures in the number of sales and average sale prices are likely to increase, particularly if more inventory makes its way to the market.

Muskoka Real Estate Market Update – January – May 2020

So much change took place in Canada and in fact throughout the world in the first five months of 2020 that analyzing the Muskoka and Area marketplace over this period as if it was homogeneous would give a very distorted view of what occurred. All was well until mid-March, then the province implemented the emergency measures designed to combat the spread of Covid-19. The implementation of the emergency measures – the closure of most businesses, all bars and restaurants, the prohibition of short-term rentals, and the ban on non-essential travel – came at the time when the Muskoka and area marketplace was just beginning. All of these factors must be kept in mind while analyzing the market through this period.

Generally, waterfront sales even in the first quarter of 2020, felt the impact of the emergency measures. Throughout the region sales declined by 5 percent compared to the same period last year, from 151 to 144 reported waterfront property sales. Prices also declined but marginally, from $509,911 to $500,000, a drop of 2 percent.

April’s results were much more dramatic. By April the lockdown measures were fully in effect, not only restricting non-essential travel but making in-person showings of properties very restrictive. Open houses, both public and agent open houses, were banned.

In April 64 waterfront property sales were reported sold in the Muskoka region. This compares negatively to the 102 reported sales for the same month last year, a decline of more than 37 percent. It is not surprising that average sale prices also declined. Last April the average price for all waterfront sales was $587,500, slipping by 9 percent to $535,000 this year.

By May the waterfront overall marketplace rebounded strongly. In May 2019, 206 waterfront properties came to market. This year, 175 new waterfront listings came to market, a decline of only 16 percent. This is quite remarkable in light of the fact that the number of new listings that came to market over the same period in the greater Toronto area was almost 55 percent fewer new properties on the market compared to May last year. Sales during this period were even more remarkable. Last May 77 waterfront properties were reported sold in the region. Surprisingly, 78 properties were reported sold this year. No doubt this reflects the space and sanctuary trend that has been triggered by the Covid-19 pandemic.

Sales and listings on Muskoka’s three Big Lakes, Lakes Joseph, Rosseau and Lake Muskoka clearly reflect the impact of the emergency measures and the fact that the equity markets collapsed after mid-March (although largely recovered by the time this report was prepared). The price point on the Big Lakes is that much higher than many of the waterfront properties on smaller lakes scattered around the region, making them more sensitive to massive shocks to financial markets and the economy. The chart below vividly sets out the difference in inventory and sales to the end of May for new listings that came to market and the number of waterfront properties that were reported sold and the respective Big Lakes. Numbers for Lake of Bays and Huntsville’s four big lakes have also been included. The chart clearly indicates that by the end of May, both listings and sales on the Big Lakes had made a remarkable recovery.

Average prices on the Big Lakes have continued to rise over the period. This is no doubt due to the fact that the sales that have been recorded have been higher priced properties that have attracted buyers that have not been impacted by the emergency measures and their financial fallout. At the end of 2019 the average price for properties sold on Lakes Joseph, Rosseau and Muskoka (for all properties selling over $500,000) came in at $2,639,726. By the end May, and despite the pandemic and all the associated negative fallout, the average sale price came in at $3,074,542, an increase of 16 percent.

Notwithstanding the impact of the emergency measures, Chestnut Park continues to be the industry leader in sales. We continued to invest in technology and develop innovative methods for showing properties and for selling them. At the same time, we were, and are, committed to the local community and have developed a fund raising program to assist South Muskoka Hospital in Bracebridge. In the Port Carling area, Chestnut Park and its sales representatives were responsible for more than 87 percent higher sales volume than the nearest competitor office. On a year to date basis, we sold 24.5 percent more recreational property than over the same period in 2019 and increased our dollar volume of sales an outstanding 44 percent.

So, what does all this market data mean. The waterfront market place was stunned into stillness when the emergency measures were announced in mid-March. However, as indicated above, the waterfront marketplace does not normally begin to perform until well into April and May. While the emergency measures caused a pause in the market place, after a period of adaption to the new restrictive protocols, it has begun to perform in a fashion consistent with historical patterns. Given the trend towards space and sanctuary by buyers, it is anticipated that throughout the summer months, the market should out perform 2019. The major concern is supply: hopefully there will be enough supply to meet not only the historical demand, but the demand for rural and recreational properties created by the pandemic.