Politicians, newspaper columnists, lobbyists, and the general “person on the street” all have opinions.  Someone asked me the other day “how do young people get into the market with prices like they are?”.  I had to remind him that when I took my first mortgage in 1989 it was for 10.5% and I was happy (before that, mortgages were at 16-18%).  $100,000 cost $1,000 a month in carrying costs.  Back then it was also a question as to how to “get into the market”.  Now you get 2.5-3 times the mortgage for the same cost.  My point is that it has always been difficult to start.  The down payment is usually the biggest hurdle, especially saving while paying rent.  Some live at home while they save, others are able to go to the “bank of mom and dad”, some do both.

Are prices too high? Is it unhealthy and not properly balanced?”

The May Market Stats just came out and the trend of the previous months continues with year over year pricing being way up. This month it was 28.4%!! But, as we said last month, this is compared to May 2020 when we were still in the early stages of a worldwide Pandemic with hospitals being overrun, “stay at home” rules in place (and being followed) and global uncertainty. It wasn’t until the summer when we started to see people breathing again in real estate.

The real comparative index is the seasonally adjusted increase (April to May 2021) which was only 1.1%. Days on Market (DOM) was down by a huge amount year over year and seasonally at 53% and 54% which shows buyers weren’t waiting to snap up homes that they wanted.

There was a general feel that things had slowed down a bit and only a  1.1% increase was felt.  There is also a bit of seller “greed” out there with pricing that is abnormally high and some offer dates coming and going with no sales.

I looked at the real estate area of C02 that encompasses a broad spectrum of homes from Yonge and Macpherson, Yonge and St. Clair (west of Yonge), Annex, Seaton Village and Casa Loma. 

This area encompasses multimillion dollar Yorkville homes and also smaller semis.  Even though the average selling price in this area is much higher than the average selling price in the GTA I always feel that it gives a good cross section of residential home sales (excluding condominiums) and prices.

Refer to Fig. 1 for average price chart.

From this graph you will see that 2020 saw a definite jump of 14% with 2021 so far showing a 5% increase.  These 2 years will also be anomalies in real estate and the rest of the world’s economy.  No one knew how to predict trends after March 15, 2020 and how living habits would change.  While the  2020 drastic increase in price is not self-sustaining I believe the natural order of the economy and supply and demand will balance out the prices more. That said, prices will increase. In Toronto, in general houses and condominiums see an approx. 6% compounded increase in prices and here, in C02 we see a slightly elevated rate at 8.5%.  When reviewing over a broader time frame it becomes obvious that a monthly increase of 28% in May from 2020 to 2021, as talked about, really does not tell the full, complete story.

I believe this month, June, will continue on the trend of May with prices going up but less demand as we enter the normal “summer market” which is historically quieter.  Now that patios are slated to open June 11th and the warm weather is upon us, talk of quarantines ending in July it appears that we are getting back to a sense of normal and this fall should be more of a normal fall with increased sales activity in September, October, and November.

As always, I would love to hear your thoughts, comments, and opinions.

Have a great rest of June!