GTA condo sales jump 90% in first two weeks of January

The GTA’s condominium market is heating up again, with sales surging 90% year-over-year on the MLS through the first two weeks of January.

“We’re seeing a huge rebound in interest and demand. Condo listings are up 66% over last year, but it’s interesting to see such strong demand for condos downtown,” said John Pasalis, president of Realosophy Realty. “For the second half of 2020, the condo market was pretty sluggish and prices in the downtown core dipped about 10%, but a lot of investors saw that as a good opportunity to jump into the market and potentially get some value by taking advantage of a surge in listings.

“[Investors are] optimistic and believe prices will go higher in the near term, and this is largely what’s driving investor behaviour.”

The optimism began manifesting late last year with condo sales in December increasing by 75.9% year-over-year in the City of Toronto, according to the Toronto Regional Real Estate Board’s latest data. The impetus for renewed confidence in the condo market was likely news that COVID-19 vaccines are available for distribution.

“I do think the vaccine was a big issue and perhaps led a lot of investors to jump back in during Q4,” said Pasalis. “A combination of softening prices, the vaccine and recovery caused optimism to kick in and I think that helped swing the market a fair bit, for sure. A bit of optimism led people to jump into the market. We heard news about the vaccine and that a good number of Canadians would be vaccinated by September, and that led investor sentiment.”

Although it doesn’t look like inoculation targets will be realized by the end of Q3, prolonged distribution delays aren’t expected.

Frances Hinojosa, mortgage broker and managing partner at Tribe Financial, confirmed that the downtown Toronto condo submarket in January has picked up from where December left off, with young professionals taking advantage of low interest rates and soft condo prices to become homeowners. Hinojosa also says another cohort of buyers with an eye to the future are active as well.

“Investors understand we’re going to come out of this, and back in October the government announced it’s going to substantially increase the number of newcomers to Canada to 1.2 million in the next three years, and 60% of them will be economic class,” she said. “It might not seem like there are investment opportunities right now, but Toronto’s downtown core has retained the companies that need those workers. They will be renters, so immigration will fill that gap.”

Although consumer confidence has resuscitated the city’s condo market, Pasalis warns that it could be tenuous and that Q1-2021 may determine what happens for the rest of the year.

“Q1 will tell us a lot. If rents start falling even more, then it will basically discourage investors from jumping in,” he said, but noted that the market will remain buoyant “if news continues being positive about vaccines and people are optimistic about immigration picking up.”