Originally Posted In The Toronto Sun On November 26, 2021
Even during unexpected global events such as COVID-19, the real estate industry has avoided a downturn
It seems that every couple of years, we hear about real estate in Toronto and the Greater Toronto Area going bust. I’m not sure why, because the last time I saw the market drop substantially was in 2008 during the financial crisis.
Yet in Toronto at that time, the market simply paused for about six months. Prices flatlined, and there were some fantastic deals to be had. The it all rebounded, and since then, we haven’t looked back.
Even during economic turndowns and unexpected global events such as the COVID-19 pandemic, we’ve avoided a disastrous downturn that would indicate a “bust.”
In 2020, the Ontario pre-construction market sold the highest dollar value on record and had one of its best years since 2011, in terms of units sold. At Eleven Eleven Realty, we had our biggest sales year in 2020 in terms of units and average price. Plus, Altus Group statistics showed that despite the pandemic, overall GTA new home/condo sales outperformed those of 2019.
Building on that momentum, this year the overall GTA market came back strong yet again. By March, sales of single-family and high-rise homes were above the 10-year average, and we had the second-highest March for sales since 2000.
By August, we experienced the highest number of condos sold in any August on record, and how about those amazing September stats? Overall, sales were 16 per cent above the 10-year average, and condos reached the third-highest level of sales for September since Altus group started tracking in 2000! Seems to me that even a global pandemic can’t keep us down.
And let’s look at the facts that support “boom” over “bust.” By 2051, the GTA’s population will increase by 4 million, largely through immigration. Every year, we see about 300,000-400,000 immigrants come to Canada, and approximately cent of those newcomers settle in Toronto and the GTA.
Some purchase homes right away, but for many, they are ready to buy in five or six years. We see a net migration of 96,000 families a year who need a home in Ontario.
According to Ottawa-based Smart Prosperity Institute and the Ontario Home Builders’ Association, we need 1 million hew homes in Ontario in the next decade to adequately satisfy demand.
Our condominium stock never meets the minimum requirements for the City of Toronto, especially as many condos help to provide rental opportunities.
Unfortunately, knowing what we need doesn’t mean that number of new homes and condos can be built, especially with the municipal approvals process taking longer than ever before. Last year, as an industry, we could have sold twice the number of homes we did, if they could have been built.
With prices going up continually because of pressure on land costs, supply chain problems, lack of supply, etc., it’s always better to get into the market sooner rather than later.
Remember that Toronto and the GTA hold a special appeal on the global stage. I’m confident that our new home real estate market will be just fine in the future, barring some unforeseen worldwide catastrophe. And even if that were to happen again, I see things temporarily flatlining at the worst.
Michael Klassen is the Broker of Record, Eleven Eleven Real Estate Services Inc., a residential pre-construction listing brokerage firm in Toronto.