We’ve all heard the Toronto Real Estate numbers for March, and to call this a “hot market” would certainly be an understatement. 15,652 transactions for the month of March 2021. Even in 2016, the hottest year on record, we did not attain these types of sales numbers in a month. Over FIFTEEN THOUSAND transactions last month!! To put this into perspective, the first quarter of 2020 was HOT, albeit that quarter took a huge hit in the last 15 days of March due to the Covid shutdowns. But still, we had 19,683 sales in Q1 2020. The best year on record for Toronto Real Estate, as mentioned above, was 2016. 113,040 transactions were recorded that year. Q1 of that year saw 22,483 sales take place. The second busiest year in history was 2015, where we saw 101,214 transactions for the year. Q1 of that year had 19,498 transactions. How did Q1 of 2021 rank? 33,503 transactions in Q1 of 2021. No, that’s not a typo, we had over THIRTY THREE THOUSAND transactions in the first three months of 2021. This has people in a frenzy about the housing market and once again the calls to slow it down have started. There is talk of CMHC asking for an increase in the qualifying rate AGAIN to slow down he market. WHY? We already tried to choke off demand in 2017. How did that work out? The problem is NOT demand. The problem is SUPPLY!! Why is this so hard for the governments to understand? Yet they feel they should strangle buyers rather than increase supply which would automatically decrease competition and thus the average price points.
So, where do we go from here?
Next month, we will again get bombarded with stats that show an “overheated” housing market. This will not be anywhere close to the true picture. Last April, we saw 2,957 transactions. The entire planet was pretty much shut down. Same for May, we saw only 4,594 transactions. June of last year saw 8,648 transactions. Typically you’d see about 11,500 transactions per month during these three months. This is traditionally the busy Spring Market for Real Estate. Let’s look at Q3 of 2020. We only had 16,199 sales for the entire second quarter. This year, you’ll see a more traditional second quarter. Thus, if we have about 36,000 sales in Q2, we will be up 122% in units sold April to June. YTD after the first half of the year, we will see approximately 70,000 transactions and be up almost 100% in units sold over the same period in 2020. These numbers will create havoc with analysts and economists who will start predicting the greatest crash in Real Estate history. To bring some calm to this craziness, you cannot compare this Q2 to last year’s Q2. In fact, last year’s Q2 should not be used as any type of comparable. It was an anomaly. As we settle in to a “normal” real estate year for transactions, we will start to see declining sales numbers for the last two quarters, as they will be compared to Q3 and Q4 of 2020 where pent up demand caused sales to spike. The declining numbers in Q3 and Q4 should not be considered a “cooling off” or “bursting bubble”. It’s just a return to normal for the Real Estate Market.
At the start of the year, I had predicted that 2021 would compete with 2015 as the second busiest year in Toronto Real Estate history wth approximately 103,000 to 104,000 transactions, and possibly compete for top spot if borders open up and foreign buyers return to the market. I still believe we will finish the year in second place, if all things remain the same. The strength of the first quarter may see us push hard for top spot, even without foreign activity. We may beat my initial predictions and finish around 109,000 transactions for 2021. Analysts, economists and the government need to stay away from trying to artificially alter market dynamics. The market is a supply and demand equation. Until they understand that, all they will do is create unnecessary hurdles that will prevent many Canadians from achieving their dream of home ownership. What we need from the government now, more than ever, is an influx of supply. More homes on the market means less competition for homes. This results in more of a balance, which reduces bidding wars and brings a level of affordability to allow more people to enter the market.