The results are in: 2021 was a record-breaking year for real estate in the Toronto region.
The Toronto Regional Real Estate Board (TRREB) has just released its numbers for December 2021, which shows that the year, with a total of 121,712 sales, beat out the previous record in 2016 by 7.7%. When compared to last year, sales were up nearly 30%.
Although December rounded out a record-breaking year, the month’s individual numbers were strong but not extraordinary. GTA REALTORS reported 6,031 sales last month, which is down more than 1,000 transactions (-15.7%) from the record-breaking December of last year.
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Continuing trends seen throughout 2021, low inventory remains a massive constraint on the market. Compared to last year, new listings were down 11.9% and active listings were down a whopping 59% – meaning buyers continue to face steep competition in this market, with very few homes to choose from.
These tight inventory conditions continue to put upwards pressure on prices, with the average selling price in the Toronto Region reaching $1,157,849 and the median price topping one million for the first time in history. This means that over the course of 2021, average home prices have increased 24.2%.
Here are three key takeaways you need to know about what else is happening in the Toronto real estate market:
Homes are Selling Far Above their Asking Price
Over the course of the month, properties across all TRREB areas sold for an average of 109% of their list price. This means that most properties are selling for over their asking price, and on average receiving nearly 10% more than what it was listed for. Compared to December of last year, where the sold-to-list-price ratio was 101%, this year properties are selling much higher over asking, most likely in bidding-war conditions.
This trend was most elevated in Durham, a region that’s seen an incredibly hot real estate market this year. In December, homes in the area sold on average for 119% of their asking price. In Clarington, Oshawa and Whitby, homes sold for more than 120% of their asking price, at 123%, 122%, and 121% respectively.
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There’s Less Than One Month of Inventory on the Market
Given our current pace of sales, if no new homes came to the market in January we would completely run out of homes on the market in less than a month in the Toronto Region, with our total months of inventory trending to 0.9.
In extremely competitive markets, like Durham and Dufferin, this metric is currently trending to 0.5 months. It’s a similar story in Halton, where the metric sits at only 0.6 months.
While months of inventory have remained extremely low in the Toronto Region for much of recent history, compared to December of last year, where months of inventory trended towards 1.6, it’s clear ultra-low inventory is continuing to tighten market conditions.
To put in perspective, the national average for this metric has typically trended around 5 months.
Homes are Selling Fast, Even by December Standards
December is known to be a quiet month in real estate – filled with parties and busy holiday schedules, most buyers and sellers decide to put off their move to the beginning of the new year. But even despite that factor, and that overall December had fewer sales this year than last, the stats show that properties are moving quickly.
For instance, when looking at total property days on market, last December saw properties take an average of 35 total days to sell. This year, it took only 19, a decrease of 45.7%. This just goes to illustrate how tight the market conditions are in the Toronto Region – even with fewer sales, low inventory, and a hyper-competitive marketplace means that buyers are snapping up available homes quickly.
What does this mean for buyers?
Looking at sales volumes alone, it might seem like this December was a quiet month for real estate. But, after taking a look at other important metrics, like:
How close homes are selling to their asking price
How many months of inventory are left on the market
And how quickly homes are selling
It becomes clear that buyer demand is strong, but having too few homes for sale is continuing to constrain the market. All of this leads to an extremely competitive marketplace for buyers.
Although historically, more supply tends to come to the market in January as would-be sellers change their focus from holiday get-togethers to listing their home, the same phenomenon can be observed for buyers as well. Meaning many industry experts aren’t anticipating that the buyers will find significant reprieve without supply-side intervention.
“Tight market conditions prevailed throughout the GTA and broader Greater Golden Horseshoe in 2021, with a lack of inventory noted across all home types. The result was intense competition between buyers, pushing selling prices up by double digits year-over-year. Looking forward, the only sustainable way to moderate price growth will be to bring on more supply. History has shown that demand-side policies, such as additional taxation on principal residences, foreign buyers, and small-scale investors, have not been sustainable long-term solutions to housing affordability or supply constraints,” said TRREB Chief Market Analyst Jason Mercer.
So what’s a hopeful buyer to do in this market? According to Zoocasa Sales Representative, Evelyn Anders, it comes down to choosing the right expert to help navigate these conditions.
“Even in a challenging market, like this one, an experienced agent will be able to use strategies that create opportunity for their clients. No inventory doesn’t mean no opportunity, it just means you may have to go about your home search creatively,” says Anders.
Rachel is Zoocasa’s PR and Content Marketing Manager, and is responsible for creating content that helps Canadians make more informed real estate decisions. Previously working in pre-construction sales and marketing, she brings a unique perspective on the real estate industry. Outside of Zoocasa, she can be found sprucing up her fixer-upper in Hamilton or sewing something new to wear.