March 2021 GTA real estate review.
We sit down to talk with Steven Ho, a Toronto real estate agent with Better Homes and Gardens to talk about the March 2021 GTA real estate market.
We discuss how spring 2021 is starting and what’s going on in the market in Toronto. Join us for the full discussion below:
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Don’t feel like watching? Find the full transcript below!
Chris: [00:00:00] Welcome, everybody. It’s Chris Molder here from Tridac Mortgage, and I’m joined by one of my favourite realtors in the GTA, Stephen Ho, big wave. Stephen, how are you?
Steven: [00:00:11] I’m good, man. The market’s moving well, moving well.
Chris: [00:00:15] I bet you are run off your feet.
Chris: [00:00:22] I’m going to leave it to you. I’m not going to steal your thunder. What were the main talking points and headlines from the release for the month of March?
What happened in March?
Steven: [00:00:31] So for the Toronto Real Estate Board, the markets, that it’s kind of interesting and you have to take these numbers with a grain of salt, because if you remember last year, middle of March, that’s when the lockdown happened. So the numbers are going to be a little bit skewed because pretty much the second half of March 2020 was nonexistent. Right. In the first half, the market was moving very well. Yes. Sales are up 97%, which is almost double what happened. But if last year was only half the month, like, do you count it as the other half. Right. Right. So what else is interesting, obviously, is the price people are going to talk about. It’s gone up over 20%.
Steven: [00:01:17] New listings are up 7% from last year. The market is down. So there’s a lot of definitely a lot of activity happening. But the sales, the demand is still there. However, it’s not at the rate of how many new listings are coming out, 20% year over year growth can’t sustain or even growth from last month can’t sustain. But the bar is already set from before. So the sales right on now is going to pretty much hold steady to where that bar is set. Right.
Real Estate sales are holding steady in Toronto
Chris: [00:01:52] So one of the things that you really look at are new listings to sales. And do you have any metrics around that over the last couple of months?
Steven: [00:02:03] Yeah, I know for sure. I’ll share this little chart. We’ve been keeping track of the market because what tells us how the market is moving is the consumption rate, what’s the supply and what’s the demand and what’s the trend. Right. Because that will tell us what buying habits are, sellers habits. So we’ve been keeping track of this from last year. This chart is for 2021. And what we’re seeing here is at the beginning of the year, the market, there wasn’t enough inventory.
Chris: [00:02:36] Great. So just to be clear, as those green lines are the bars there are weekly or daily.
Steven: [00:02:44] These are daily.
Chris: [00:02:45] Every two days. The daily listings. Yeah.
Reviewing Supply and Demand
Steven: [00:02:48] So these are daily new listings. The dips are the weekends because the offices don’t enter the on the weekends generally or reporting sales. But what the blue lines are the the number of listings sold. Obviously there’s generally more listings than sales, but you can see sometimes there’s more sales than there are listings. Wow. And that will really put some upward pressure on price. But then again, we can get more into detail. But these lines here are seven day averages of percentage of listings sold.
The yellow line is overall. But the interesting thing that I picked up seeing this between freehold and condos, we’ve been talking about how hot the free market is and how the prices are going crazy. The sales is just going nuts. But condos is the red line. Freehold is the orange line. Condos have been outperforming freeholds since the middle of January to pretty much the middle of towards the end of March.
Condos are now outperforming freehold properties
Chris: [00:04:03] Wow. So I’m seeing there the peak in towards the end of February 90. Over 90 percent of condos that got listed were gobbled up.
Chris: [00:04:14] So, yeah. And now that’s incredible.
Steven: [00:04:17] Two week period on. So. Right, right, right, right, I mean, the average seven day average, so it’s been the condo market has been very high and nobody seems to be talking about it. And now that the stats are out, there’s reports saying that if you think the condo market’s going to drop some more. Wait and see, because that opportunity is kind of going out the window. It looks like this trend, this growth in activity is is pretty much regular seasonal activity that we’re used to seeing before.
We’re seeing a typical spring market in Toronto Real Estate
Chris: [00:05:01] Right. I guess that that’s good news for anybody who’s who’s watching and wondering what this all means. What it really should translate into is a leveling off of prices and more stability in the marketplace that we don’t have this double digit growth year after year that we’ve experienced in the last 12 months.
Steven: [00:05:23] Now, the interesting thing is I wonder if it’s the increase of activity or was it because of the interest rates that have kind of crept up over the last couple of weeks?
Mortgage interest rates are rising
Chris: [00:05:36] Yeah, it rates have crept up. So the five year fixed rates from February to March are up about half a percent. So maybe that is playing into people’s psyche. And then certainly at the time that we’re recording this, even the biggest talking point is caused by banks, economists and observers. There’s this raging debate that somebody needs to do something to help this train ride that. And so they’re calling on the bank regulator.
They’re calling on the Bank of Canada. They’re calling on banks themselves to do something to control. And so I think it’s reasonable to expect that within the next 30 days or so, we will see some new restrictions or new rules being instituted to try and pump the brakes a little bit on the market.
Steven: [00:06:33] So what are some of those proposals that they’re talking about? Like what’s the word on the street that we could see coming?
Are mortgage qualification changes coming?
Chris: [00:06:41] We are already qualifying mortgages today. The other thing people have to understand is that while rates are low, but everybody who gets a mortgage is qualifying 200 basis points over the current rate. So rate a five year fixed rate might be 2%, but you’re qualifying based on 4.79% Today. So people are qualifying at almost five percent for their mortgages. But we could see further qualification as stress testing being introduced. Yeah, also, I can see perhaps a change, I suspect the change to a down payment requirement so that as the home price goes up further, more and more down payment is required. Used to be that all mortgages to be amortized over that time was thirty-five years.
Stress test changes could impact some borrowers
Those were the good old days and then it was 30 years. And now, depending on how much downpayment you have, you can do twenty five or thirty. Right. But now it could just be everybody has to do twenty five years so that those are probably the two most likely changes, the low hanging fruit to affect some change. Is it going to make a big difference, a material difference? Probably not. But it should help to just say, hey everybody back to their corner, relax, let’s reset and kind of get some normalcy again.
Steven: [00:08:03] The challenging thing that I see is that all of these like rules or implementation policies, they’re trying to slow down the demand. But the real problem in the GTA is a supply issue, there’s not enough houses for the amount of people that are living here that are moving here, that are immigrating here, that are working here. There’s not enough houses for people. Yeah. What do you think is going to happen? Just like tell people, you know, you have to rent, you can’t buy. That’s going to change anything. They need to build more houses.
Is there more growth in store for Toronto?
Chris: [00:08:45] Yeah. Yeah, I agree wholeheartedly. We have a systemic issue here and there. There seems to be blamed on people running up the prices and it’s bad, bad people being greedy. But yeah, it really is a housing issue. And Steve, you and I have talked about this before as well. Toronto is a very desirable place. We have a great immigration policy. So if you think things are crazy now, just wait to see where we get to. And Toronto is not going to be any different than other world-class cities.
Steven: [00:09:18] We’ll see how things go. It’s interesting to kind of correlate the real estate activity with the mortgage side of things with interest rates and the timing of everything.
Chris: [00:09:29] Yeah, likewise, Steve and I really appreciate your time and stopping by to chat about this. And we’ll be in touch in the coming months and see how this conversation evolves.
Steven: [00:09:42] I definitely will. We’ll keep an eye on it and we’ll check in with you later. Thanks for having us.
Chris: [00:09:46] Sounds good, Steve.No worries. It’s good to see you.
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