If there’s one thing housing experts can agree on, it’s that the 2021 real estate market has been anything but typical – and the May numbers for the Greater Toronto Area continue to buck the seasonal trend, with sales sliding as we approach the summer months.
A total of 11,951 homes traded hands last month, according to the Toronto Regional Real Estate Board, down -12.5% from April, and 23.6% below March, which is now considered the peak month for this year’s activity. Sales are still up 160% from the lockdown-induced slump observed last May, but are down a bit from a long-term perspective as well, at -6.5% below the all-time record seen in May 2016.
Buyers Are Taking a Breather From Frantic Pandemic Pace
As May is usually the strongest month for sales, it’s clear the pandemic-fueled buyer urgency that has driven this year’s market is winding down, as there’s an end in sight for lockdowns in Ontario, and vaccines continue to roll out.
Another factor behind slower sales is a lack of immigration, says TRREB President Lisa Patel. “There has been strong demand for ownership housing in all parts of the GTA for both ground-oriented home types and condominium apartments. This was fueled by confidence in economic recovery and low borrowing costs,” she states in TRREB’s May release. “However, in the absence of a normal pace of population growth, we saw a pullback in sales over the past two months relative to the March peak.”
Too-Few Homes for Sale Keeps Prices at All-Time Highs
However, the GTA market continues to suffer from a deep lack of supply, which only worsened this month – a total of 18,586 listings came to market, down -10.7% from April and -18.1% from March, though up by double when compared to the same time frame in 2020. That’s kept marketing conditions steeply competitive for buyers, with a sales-to-new-listings ratio (SNLR) of 65% throughout the region. This ratio, which is calculated by dividing the number of sales by the number of new listings introduced over the month, illustrates when a market is in favour of buyers or sellers: a range between 40 – 60% indicates balanced conditions, with above and below that threshold indicating sellers’ and buyers’ markets, respectively.
“While sales have trended off the March 2021 peak, so too have new listings. This means that people actively looking to purchase a home continue to face a lot of competition from other buyers, which results in very strong upward pressure on selling prices. This competition is becoming more widespread with tighter market conditions in the condominium apartment segment as well,” stated TRREB Chief Market Analyst Jason Mercer.
These tight conditions have kept home prices at their all-time highs, at an average of $1,108,453, up 28.4% from 2020, and 1.1% from April. The MLS Composite Benchmark, which monitors market prices with the extreme highs and lows stripped out, rose 19% year over year. Homes for sale stayed on the market for an average of 11 days, unchanged from April and March.
The 905 Market Is Hotter Than the 416
As has been a trend throughout the pandemic, buyers will face the most competition in more suburban and rural markets compared to the big city, as prices – while historically high in these markets – are still lower than what’s found in the City of Toronto.
The average price for a home in the 416 hit $1,116,737 in May, a 17% year-over-year increase and up 3% from April. Sales rose 177% annually, with 4,118 transactions. This was offset by a larger influx of new listings, with 7,051 coming to market, which helped pull the city’s SNLR down to 58% from 63% in April, indicating a return to a more balanced market. The average price for a detached house hit $1,716,272 (+20.5%), while a condo in the city now costs $716,976 (+6.3%).
Annual price growth was more than doubled in the 905-area markets, up 35% at an average of $1,104,098. There were 7,833 transactions, marking a 152% increase from last May, and 11,535 new listings brought to market. However, that wasn’t enough to chill buying conditions, as the SNLR sits at 68%, up slightly from the previous month, indicating things continue to heat up in the 905, compared to a slight cooling in the 416.
For more info on how sales and prices have performed in May 2021 in the 416 and 905, check out the infographics below:
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