The August 2020 GTA real estate market is best described by a rise, fall, and balance
We sit down to talk with Lorena Magallanes, a real estate broker, and co-founder of Stomp Realty Inc., to talk about the August 2020 GTA real estate market.
Here, we’re talking more about the August 2020 GTA real estate market.
Lorena Magallanes contact info:
Don’t feel like watching? Find the full transcript below!
Chris: [00:00:00] Today, I’m joined by my good friend, Lorena Magallanes, co-founder of Stomp Realty and 14-year veteran of the real estate industry, although she tells me she started much younger than that in sales offices. Good morning, Lorena.
Lorena: [00:00:18] Hi, Chris. Thank you so much for having me.
Chris: [00:00:20] Well, Lorena is stopping by to talk to us today about the August numbers. They look a little bit confounding. I’m really interested to get your perspective, Lorena. Give me three words to describe the August real estate numbers just released by TRREB.
What happened in August?
Lorena: [00:00:37] So the three words are rise, fall, and balance.
Chris: [00:00:42] Ok, hang on, let me pull up the sheet here, can you see that.
Lorena: [00:00:46] Yeah.
Chris: [00:00:47] All right. Perfect. So you’ve chosen rise, fall, and balance. Tell me a little bit about why do you choose the word rise? I think I know why I saw some of those numbers, looks pretty impressive.
Lorena: [00:01:00] Yeah, so year-over-year, I mean, the stats have come out and the sales from last year to this year have increased dramatically. It’s been a 40.3-percent increase in sales. Again, that’s been primarily driven by the demand for detached and semi-detached homes, as well as townhouses. New listings year-over-year have also come up and it’s gone up by 56.8-percent. And again, this has been a bit of a built-up demand from the spring.
Obviously, our spring market was kind of nonexistent this year. So, it’s kind of trickled into the summer. And a lot of the new listings have also been condo listings. And condo prices have also increased year over year with a 20.1-percent increase from last year.
Strong year-over-year growth
Chris: [00:01:54] That is incredible. That number just jumps out at me, a 20-percent increase year-over-year. I mean, that’s not sustainable. Are you surprised to see that type of jump in home prices in Toronto?
Lorena: [00:02:07] I mean, it is a little bit surprising, but I think what has happened this year is a lot of people have realized that they need more space, they want a little bit more land, backyard space. And so all that has just driven the home prices to shoot up. I mean, Detached House in Toronto is at around 1.5 Price on average.
Chris: [00:02:32] Right, 1.5-million. I guess previously, as I understood in 2019, it was really the year of the condo, wasn’t it? So a lot of the sales volume was condos which tend to drive down the average price wouldn’t it.
Lorena: [00:02:46] And so now I think this is the first time in the last about five years where we’ve seen a little bit of a decline with condo prices.
Chris: [00:02:53] Right. So the average is getting skewed in favour of the bigger, detached homes. So that’s the rise. That’s pretty obvious and clear. I mean, those are some impressive numbers and should give people a lot of confidence. What about fall? What’s happening with the fall side of your observations?
Lorena: [00:03:12] So with the fall month-over-month sales, the number of sales has decreased a bit 2.8-percent. In August, there was 10,775 number of sales, whereas in July that was 11,081. Not surprising there.
Chris: [00:03:32] Right
Lorena: [00:03:32] August typically, in a normal real estate market year, August is one of the slowest months of the year. So not surprising that July had a little bit more sales than August.
Chris: [00:03:45] Right. So it’s a slight decrease. Maybe people were on vacation a bit. I’m curious. I’ll circle back on this and get your opinion on what you think is going to happen in September and the end of the year. And what about the balance? What do you see in that balance in the market?
The market is finding balance
Lorena: [00:04:01] So month over month, new listings have been pretty balanced. It’s just been a small increase of 3-percent. Again, this does have a lot to do with more condos being on the market that the condo sales, the listings have overshot the number of condo sales.
Chris: [00:04:23] Right
Lorena: [00:04:23] So, the condo market, in general, has become more balanced. Whereas like you said, last year there was a lot more of an increase in condos and the demand for larger condos. And this year we’re seeing that demand more so for detached and semi-detached homes.
Chris: [00:04:38] Do you think the change to condos is really due to rents being impacted and Airbnb? Is it that your observation that it’s a market?
Lorena: [00:04:50] Absolutely, especially particularly in the downtown core, you have an oversaturation of condos because, again, there’s investors that might have felt they were over-leveraged and want to kind of get rid of their condos and have decided to put them up for sale and cash out, and then, of course, the Airbnb’s as well. The short term rentals, they have either decided to go more so for long, longer-term rentals or in a lot of cases, just try and sell the units as well.
Changes in the Toronto condo market
Chris: [00:05:22] Right, right. Interesting. So the condo market is showing some softness or I guess more balance and more normal market situation, which is good for both buyers and sellers.
Lorena: [00:05:33] It’s good for buyers right now if they want to get into the condo market.
Chris: [00:05:38] Would you say it’s good for buyers to get into the detached home market?
Lorena: [00:05:43] It’s still you know, you still see bidding wars for houses. I mean, obviously, every neighbourhood is different, but you’re still seeing quite a few bidding wars. There’s still quite a bit of demand there for the housing market. Properties are selling quickly and they’re selling for asking or asking.
Chris: [00:06:02] Over asking in general. So frustrating if you’re a buyer. I guess my question here is you’ve got this slide, your predictions for September 2020. So how do you see things unfolding for the rest of this month and into the end of the year?
Lorena: [00:06:19] Yeah, well, I mean, September should be an interesting month. I do feel listings will go up dramatically, given that the last two weeks of August there was that little bit of a fall there in sales, and primarily because people do go on vacation and they do go and enjoy the last week or two of August. So September, we should see listings shoot up dramatically. The number of sales should also go up moderately. People that are looking to sell will probably want to do that prior to a second wave hitting us if it does.
What’s in store for the fall?
Chris: [00:06:54] Yes, this winter.
Lorena: [00:06:56] Yeah. And again, people again in September or October is probably the best time to try and list and sell prior to the winter months. And then condo pricing, I still feel there are still quite a few condos available for sale in the downtown core, particularly. I do feel that there might be some fall in prices, but with the condo market and with house prices staying pretty strong.
Chris: [00:07:22] So it sounds like you’re anticipating a more balanced market going forward. If listings increase, sales moderate a little bit, maybe there’s a little more opportunity for somebody looking to get into the market.
Lorena: [00:07:36] I feel that’s that’s what it’s looking like for us as we head towards the winter months.
Chris: [00:07:42] Right. So then to wrap this up, if somebody wants to list or is interested in buying, how do they get in touch with Lorena? What’s the best way for them to reach out to you?
Lorena: [00:07:53] Well, we’re on social media so anyone can look us up, under Stomp Realty, under our affiliate condo chicks, or myself directly as well. I’m all over social media or they can give us a call at our office at Stomp Realty.
Chris: [00:08:13] Right. Thank you so much for joining us today. Really appreciate your insights. And for anybody viewing, I’m Chris Molder from Tridac Mortgage. Thanks so much for stopping by. Reach out with any questions relating to mortgage financing. Thanks again, Lorena!
Lorena: [00:08:27] Thank you, Chris. Thanks so much.
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