Approaching the holidays, new listings have slowed down, but buyers in the freehold market have stayed aggressive. Single-family homes that are move-in ready with parking and located in established neighbourhoods, are currently the ‘tech stocks’ of Toronto real estate. Neighbourhoods on the periphery of the downtown core, like Riverdale, High Park, Leslieville, Roncesvalles, Beaches, are continuing to get bid up and outperform. If you are not in one of these neighbourhoods, don’t worry. The flight out of condos and into houses has been a buoy for the Toronto single-family home market in general.

Around this time of year, there usually aren’t many new premium listings, but I am sensing a shift in market psychology heading into 2021. Below I feature a few examples of renovated homes that you wouldn’t generally see listed at this time of the year. These properties are holding offers only a couple of days before Christmas, which is uncommon. The best practice in past years has been to wait until the new year or spring. This year the market has been extended with people stuck at home and not leaving on holidays. Also, the weather has been relatively good weather. Some sellers may also be trying to pre-empt a more restrictive lockdown in January – February. More on that later.

As we move further into 2021, more transactions will be less covid-inspired and will be transactions that would be happening regardless ie. to start a new job, a new family, lifestyle, etc. The transactions that have been done because of covid, meaning people who are going to leave the city, or are uncomfortable in the city, or are looking for more space outside of the city, have already or are about to make their move. For some, covid-19 caused their move, for others, it expedited it. I expect the majority of the deals moving forward to be transactions that would be done in any market.

I believe this is an important point, especially for the condo market, because as our lives and decisions become more normalized later in 2021, so should people’s decisions on housing. What is important to note about the increasing number of cases and the most recent lockdown in Toronto, is that fear hasn’t spiked like it did in the spring. People have learned how to deal with the virus and to some extent, have become desensitized to it. If we go back into full lockdown this January, it will have much less effect on people’s decision-making with regard to housing, than it did in April.  

Having said that, there is one part of the Toronto housing market that is in for a rough ride this spring, and that is the rental market. The dichotomy in Toronto real estate is most acute when comparing resale vs rental. In the resale market, there is the ability to control inventory. Meaning that if you are an owner-occupier, you can choose to wait out the market. For the most part, you have the ability to make a decision and aren’t forced to sell your property in a down market. If you are a landlord you can’t not rent out your unit. You are forced to participate in the current market and are a ‘market taker’ to a certain extent. It’s either your investment sits empty or you lease it at market rent. This has led to a massive amount of inventory, which is building. In addition, we are moving into the worst rental period of the year, with cases of covid-19 rising.

On the resale side, I am expecting a busy winter season, with more people putting covid in the rearview mirror and planning their move for 2021. The caveats are harsher restrictions being put in place due to the spread of covid-19 and to some extent, stock market performance. If the city is essentially shut down or people are more cautious in Jan-Feb, we may experience another delayed spring market, with pent up demand fueling the market higher in the near term. There has been a lot of positive press recently pertaining to real estate prices continuing to climb in 2021 as a result of record-low interest rates. In Toronto, I expect single-family homes to continue their rise early on, with the softest segments continuing to be the rental market and resale high-rise condos. Important to watch will be the widening price gap between the average price of resale condos vs. resale houses. As behaviour normalizes, people may find themselves with little choice but to buy or rent a condo, as happened in the past.