New single-family home sales across the Toronto region skyrocketed in 2020, mirroring the shift in buyer preferences that played out in the resale market last year.

Data for the full year published today by the Building Industry and Land Development Association (BILD) showed buyers scooped up 16,973 new single-family homes in 2020. That’s 81 percent higher than the total achieved in 2019 and 25 percent above the 10-year average for the region.

The single-family homes category includes new detached, linked and semi-detached homes and townhouses, according to BILD’s data partner Altus Group.

The relative sluggishness in the high-rise market meant overall new home sales rose a more modest five percent last year compared to 2019. The total number of new homes sold across the Toronto region was 37,669, with condo sales making up 20,696 of the total. Condo sales, which include units in new low-, mid- and high-rise buildings were down 22 percent from a year ago and came in 11 percent below the 10-year average.

While it was clear that single-family home demand kept new home sales from plummeting in 2020, Altus Group said the annual total showed the Toronto market’s resilience.

“Looking back at 2020, the resilience of the GTA new home market was very evident, highlighting the underlying demand for housing in the face of economic uncertainty,” said Altus Group’s Ryan Wyse in a media release.

“Given the significant changes brought on by the pandemic, the industry and consumers were able to adapt quickly, and the result was an overall increase in sales compared to 2019, with a particular focus on single-family options,” he added.

Looking back at December data, BILD President David Wilkes noted that new home inventory was relatively low by the year’s end. Available new home inventory in the Toronto region sat at 13,171 units in December, the lowest level recorded since March 2018.

“A healthy new home market should have nine to 12 months’ worth of inventory but due to the disruptions brought about by the pandemic, we currently have only about four months’ worth, based on the pace of sales in the last year,” said Wilkes.

Millennial-aged Canadians’ frenetic pursuit of ground-related housing played an outsized role in the country’s aggregate home price spiking by 9.7% last quarter over the corresponding period a year earlier, according to Royal LePage.

“Millennials are starting to have their first or even second child—they’re over 35—and our previous research showed they preferred city cores and condominiums, and now they’re looking for homes in the suburbs, like their parents did, with yards,” Phil Soper, president and CEO of Royal LePage, told CREW, adding that the trend began before the COVID-19 pandemic, but work-from-home policies and technology “super accelerated” the trend.

“Low financing costs, a healthy industry overall, and lower house prices definitely help when you move away from the city centre. Even though prices rise faster in places like Oshawa or Burlington, they’re much cheaper than legacy Toronto neighbourhoods.”

Sixty-four percent of the 62 regions in Royal LePage’s House Price Survey and Market Forecast reported annual median price gains of more than 10% for homes with at least two storeys. Canada-wide, the aggregate price of a home was $708,842 last quarter, with the price of two-storey homes increasing by 11.2% year-over-year to $840,628, and bungalows rising 10% to $592,899. Condo prices, meanwhile, only grew by 3.9% to $509,239.

In the GTA, Canada’s largest metropolitan region, the aggregate price of home jumped by 10.4% year-over-year in Q4-2020 to $936,510, with ground-related homes rising by 11.9% to $1,102,155, bungalows increasing 12.8% to $923,047, and condos increasing 3.6% to $593,811.

“Throughout the second half of 2020, buyers were looking for as much space as they could afford. While many buyers shifted their target neighbourhood away from the city centre, so few properties for sale meant that most detached listings saw multiple-offer scenarios,” Debra Harris, vice president of Royal LePage Real Estate Services Ltd, said in the report. “2020 did bring some balance to the region’s condominium market but larger units, often in the greater region, are still in high competition.”

In the Montreal metropolitan area, the aggregate price of homes rose by 12.4% year-over-year last quarter to $487,380, with two-storey homes increasing 13.6% to $619,099. Bungalows surged by 15.3% to $391,493, and condos shot up 8.1% to $367,113.

“We could have seen a price correction if buyers had left the market,” said Dominic St-Pierre, vice-president and general manager of Royal LePage for the Quebec region. “But low interest rates, combined with increased household savings from remote work and new buyer incentives, played a key role in a market that was already highly competitive before the pandemic. In the suburbs and on the Island of Montreal, activity in the single-family segment resulted in double-digit price increases in most neighbourhoods of the Greater Montreal Area.”

The aggregate home price in Greater Vancouver spiked 7.2% during the same period to $1,155,346. Two-storey homes in the region rose by 8.8% to $1,507,279, bungalows increased 6.8% to $1,265,285, and condos saw a 3.3% boost to $662,120.

“Multiple offers were common throughout the fourth quarter and almost every detached home was attracting competitive bids. Buyer confidence is strong and current low interest rates make purchasing even more attractive,” said Randy Ryalls, general manager of Royal LePage Sterling Realty. “Buyers are worried they will be priced out of the market and with our low inventory of homes for sale in the region, prices are expected to go up in the spring.”

Purpose-built rental apartment buildings in the City of Toronto reported a record-high 5.7 percent vacancy rate in the final months of 2020, up significantly from the 1.1 percent rate recorded in the same period the previous year.

Housing market data firm Urbanation released the vacancy rate figure this week as part of its fourth quarter rental market report.

According to the report, the 5.7 percent vacancy rate represents a 50-year high when looking at historical rental market survey data available back to 1971.

As the vacancy rate rose, rent prices for purpose-built units declined 10 percent in the fourth quarter to an average monthly price of $2,337. On a per square foot (psf) basis, rent in the City of Toronto declined 6.2 percent to $3.49 psf.

There was a dearth of new purpose-built rental units under construction for the better part of the 21st century in Toronto, which resulted in investor-owned condos only partly filling the rental supply gap. This trend shifted dramatically in recent years when the pipeline of purpose-built rental projects began significantly expanding. By early 2020, the number of units under construction across the Toronto region hit 13,764, a multi-decade high, according to Urbanation.

But a confluence of factors brought about by the COVID-19 pandemic has meant much more of this new rental supply is sitting unoccupied compared to past years. In its report, Urbanation said 3,563 rental units were completed in 2019, with 70 percent occupied by the end of that year. In 2020, there were 1,699 units completed, with only 44 percent occupied by the year’s end.

“The GTA rental market faced its toughest challenges to date in 2020 due to COVID-19,” said Urbanation President Shaun Hildebrand.

“While rents have a long way to go before returning to their peak and supply will continue to be a headwind in the near-term, some improvement can be expected in 2021 as vaccinations eventually lead to higher immigration and at least a partial return to the office for downtown workers and in-class learning for post-secondary students,” he added.

Voracious demand for detached houses returned to Canada’s housing market last year, and just as in years past, unlucky buyers settled for townhouses.

“The reason the townhouse has become more popular than ever in the new construction world is, whether they’re traditional, stacked or back-to-back, they’re less expensive than detached homes, which average more than $1 million in the GTA,” said Mark Cohen, managing partner of The Condo Store in Toronto. “As a result of prohibitive pricing for detached houses, which hiccupped a couple of years ago but bounced back, and because there’s a general shortage of housing, townhouses have come into greater focus as an alternative.”

Townhouses came back into focus in 2020 because the COVID-19 pandemic trapped people, many of whom lived in condos, inside their homes for months, and when the Bank of Canada dropped interest rates, they saw their opportunity to buy a larger home. Unfortunately, the chance to borrow cheap money attracted homebuyers previously priced out of the detached market, and those unable to buy them alternatively sought townhouses.

The average price of a detached house in the GTA was $1,150,529 last year, which increased by 13.2% from 2019, according to the Toronto Regional Real Estate Board (TRREB). Conversely, townhouses averaged $734,921, rising by 11.4% year-over-year. Condominiums, which are significantly smaller than townhouses, averaged $629,491 last year.

“Townhomes always offered, on a price per square foot basis, much better value than condos, which are designed with the highest amount of efficiency and lack of wasted space,” said Cohen. ”But part of that is driven by the fact that they’re expensive—for example, the costs of concrete and underground parking are expensive, and because you spend $900-1,500 psf on a condo, certain things you might find in a house, like storage, become expensive.

“Townhouses often give you more anti-space and transitional space, and that’s closer to living in a detached home than an apartment. As a result, space is less expensive and you effectively get more for less. From a spatial perspective, townhomes offer more for less, and from a maintenance fee perspective they could be zero or negligible. There are no real expenses associated with amenities.”

Investors have also turned their attention to townhomes because they noticed the pandemic sparked desire in people for more space, and just as there are only so many detached houses for sale, there are even fewer townhouses—there were 46,359 detached sales in the GTA last year, but only 16,444 involving townhouses.

“With more people working from home, two-storey living makes sense for a variety of reasons,” said Cohen. “Investors are keen on trends and realize townhouses make sense because they allow people to functionally live and work at home at the same time.”

A report from the Canadian Centre for Economic Analysis (CANCEA) a few year ago shone a light on the dearth of so-called missing middle housing—defined as multiplexes, semi-detached, rowhomes and townhouses—in the GTA, and according to Michael DiPasquale, a CPA and COO of Dunpar Homes, the pandemic inadvertently renewed interest in these housing types.

In fact, added DiPasquale, many developers recently nixed planned high-rise developments in favour of mid-rise boutique or stacked townhouse projects, indicating that the shortage of crucial forms of housing CANCEA warned about might finally be addressed.

“Missing middle housing is more affordable for the average person and you don’t have to deal with elevators or be downtown, which is still accessible with transit or by driving a short distance,” he said. “I would say that the missing middle question has been answered because people see the need for it and the need for more space.”

Dunpar Homes has developed many infill townhouse projects just outside Toronto’s core over the years, changing the complexion of neighbourhoods in the process, and 2020 was no different. Parts of the GTA, like south Etobicoke and Streetsville in Mississauga, are prime locations for missing middle housing because Toronto’s downtown core is nearby.

“Townhouses, stacked townhouses or semis—products for people who don’t want to be in condos and can’t afford detached—fill the gap, and it’s been an issue for years,” said DiPasquale. “COVID has ramped up focus on solving the missing middle because it’s nice to have two or three bedrooms and 1,500-2,000 sq ft as opposed to 500-600 sq ft in a condo.”

Condo sales soared across the Toronto region in December, and as one economist wrote, it looked like buyers were out “in full force looking for bargains.”

While roaring detached home sales and skyrocketing prices have stolen the lion’s share of the headlines in recent months, it now appears that condos are mounting a comeback, at least when it comes to sales activity.

After the Toronto Regional Real Estate Board (TRREB) released its December sales and pricing data earlier this week, RBC Senior Economist Robert Hogue wrote that condo sales caught his attention.

He acknowledged that the challenging rental market is still pushing investors to offload their units, causing condo supply to surge and prices to continue to post only modest gains in suburban communities and fall by nearly five percent in Toronto-proper.

That said, Hogue observed that sales spiked 75 percent across the Toronto region, with similar strength seen in both city and suburban markets as “softer condo prices are now drawing more buyers in.”

In 2021, the economist is predicting that condos’ affordability advantage over detached homes will allow demand to pick up even more steam.

Of the four distinct property types tracked by TRREB, only townhouse sales in the region’s 905 area posted higher annual percentage gains than condos.

In terms of overall sales volume, detached homes still significantly outsold condos across the region, but the gap between the two property types narrowed. In November, detached homes outsold condos by 2,190 units at the regional level. By December, the gap had narrowed to 845 units separating detached homes and condos.

It’s also worth noting that Toronto region condos were the only property type to post a monthly sales increase in December. Detached, semi-detached and townhouses all saw activity decline from November to December.

With the COVID-19 pandemic forcing us to spend more time indoors, the desire for bigger homes among luxury buyers across the Greater Toronto Area has pushed sales in some expensive price categories to new highs.

GTA luxury home sales priced between $3 million and $4 million broke a record in 2020, according to new data published this week by RE/MAX Ontario-Atlantic Canada.

One thousand and sixty-two freehold and condo properties over the $3 million mark changed hands last year, about one percent higher than the previous all-time high achieved in 2017, when 1,047 homes in the same pricing category sold. Sales over $3 million in 2020 were also up over 55 percent from 2019, when 682 transactions were recorded.

Sales at even higher price points — the $4 million and $5 million categories — also rose from their 2019 totals, but did not exceed the highs achieved in 2017.

“A combination of both economic and psychological drivers contributed to a robust upswing in demand, influencing one of the greatest pivots in the GTA’s housing market history,” said Christopher Alexander, Chief Strategy Officer and Executive Vice President of RE/MAX of Ontario-Atlantic Canada, in the report.

While economic stimulus, like rock bottom mortgage rates, played a role in the market’s surge in homebuying activity, RE/MAX Ontario-Atlantic Canada explains that COVID-19 lockdowns were the true catalyst for the uptick.

The desire for home offices and more personal space were attributed as the driving forces behind luxury buyers seeking larger homes in 2020, often in less densely populated areas that sometimes fell outside of suburbs immediately surrounding the city. For instance, freehold sales over $3 million in Halton region increased by 188.8 percent annually, jumping from 45 to 130 sales.

“This same pattern played out in major urban centres in the US such as New York City and San Francisco where the pandemic has tipped the scales in favour of a more suburban lifestyle,” explained Alexander.

“And while demand is still strong in the 416, where luxury freehold sales represent 59 percent of total sales, performance in suburban areas, especially those north and west of the city, is particularly noteworthy,” he added.