Toronto housing had “amazingly strong” November despite pandemic restrictions: RBC

The Toronto housing market had a lot working against it this November.

The City of Toronto and neighbouring Peel region moved into the “lockdown” zone of the province’s tiered restriction framework, with non-essential businesses closed from November 23rd onward. Prior to that, both regions already were in the highly restrictive “red” zone.

On top of all this, despite the steady stream of strong data on the home sales and pricing front, many commentators appeared certain that the housing market would falter following the summer rebound, as high unemployment and lower incomes would eventually snuff out the momentum.

Instead, the market’s performance has been almost uniformly positive. RBC Senior Economist Robert Hogue was one of the commentators who wrote in the summer that the housing rebound would slow by the fall months, with home prices likely to begin declining later in the year. The remarkable home sales and pricing data from November led Hogue to quip “so much for the cooling” this fall in a research note published last week.

“The overall [housing] picture remained amazingly strong despite the re-imposition of tighter social distancing restrictions in the City of Toronto and Peel region in November,” Hogue wrote, noting that changing housing needs and low interest rates “kept the market boiling.”

The economist had previously written that downtown condos are currently the “weak spot” in Canada’s housing picture and that remained true for Toronto last month. Condo prices are now beginning to soften as listings have soared 194 percent, widening the chasm between supply and demand.

But it’s the strength of single-family home sales, especially in the suburban 905 areas of the region, that continue to keep the overall market boiling hot. Detached home sales in the 905 were up 33 percent over a year ago while active listings fell 40 percent.

“Very tight demand-supply conditions apply increasing heat on detached home prices across the entire GTA,” Hogue wrote.

In other words, it’s the complete opposite supply and demand dynamic playing out compared to the sluggish downtown condo market.

Looking ahead, Hogue believes condo prices will continue to decline in the near term while single-family home prices are expected to keep rising “briskly.”