Now that we’re into
December and 2021 is almost behind us, it seems only fitting that this
wild, record-setting year of Toronto real estate is winding down with
more records being set.
The
November sales figures, released last week by Toronto Regional Real
Estate Board, will come as no surprise to those who have been even
casually following this market.
Inventory
remains low, prices continue to rise, and in the absence of any strong
and decisive moves on the interest rate front, there is little
indication that much will change any time soon.
With 9,017 sales,
the most, in fact, ever reported by TRREB for the month of November,
the seasonal slow-down that once characterized our market appears to be a
thing of the past.
Eager buyers, evidently keen to lock in
limited-time-only rock-bottom interest rates, don’t appear to have the
option to take a break.
Thus, demand remains insatiable while the
supply of new listings, an essential component of any healthy and
balanced marketplace, is far below adequate.
For
the sixth consecutive month, new listings continued their decline to a
total of just 10,306 for the month of November — down 13.2%
year-over-year.
Given the nature of supply and demand, the upward pressure on prices has continued unabated.
With the average
selling price in the city of Toronto now $1,163,323, the average cost of
a home is up a full 21.7% from November 2020. Which, it should be
noted, was already an increase of 13.3% from the same month one year
prior which was, at the time, considered a noteworthy indication of how
strong our pandemic real estate market was proving itself to be.
What
this all means, really, is that the numbers aside, the conditions that
have defined our real estate marketplace since the pandemic began have
gone from what felt like a remarkable anomaly to essentially our new
normal.
Whereas once there was a gap between sale prices in the
416 and 905, which by extension represents the availability of options
for those priced out of homes in the city, the pandemic-driven suburban
exodus drove that migration at warp speed. That inventory has been
absorbed, which is why you see prices almost everywhere rising so
dramatically.
In the months ahead, what I hope to see is some
further scrutiny and analysis dedicated to understanding whom exactly is
competing to buy these homes. It seems obvious that the state of our
market cannot simply be the result of fired-up would-be homeowners
battling it out against one another.
That just seems unlikely almost two years into a pandemic that was
understood to be the catalyst for changing the nature of the way we all
relate to our homes.
Someone needs to be looking at how much of
the current momentum in our marketplace is being driven by corporate
ownership and speculation, both the institutional-type investors
gobbling up as much inventory as they can and those simply utilizing
home equity lines of credit to fund a down payment on second or third
properties.
Even if such buyers only make up a portion of people
making offers on any given property on any given offer night, that type
of participation is substantial enough to be adding to the momentum —
and the rising prices.
Once we have even a small degree of
understanding around who is driving the bus here, only then does it
actually make sense to consider the types of measures, if any, worth
considering to calm things down.
For all the talk of government
interventions like banning blind bidding and introducing cooling off
periods, none of that will make so much as a hint of difference if it’s
the investor class pouring fuel on this fire.
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