February 2021 Market Report

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Each Executive Summary Report is for a specific TRREB zone combination and includes a map of the included zones and a 1 page summary for each property type (detached, semi-detached, townhomes, condos)
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The Information / statistics you can find in each Executive Summary Report include:

• Data comparing the – 1, 3, 5 and 10 year sales averages.

• Stats categories – Sales, New Listings, Active Listings, Average Price, Months of Inventory (MOI), Sales to New Listing Ratio (SNLR)

The Monthly Outline

The condo recovery is almost complete, multiple offers are everywhere, prices are skyrocketing, and it is rumoured Kyle Lowry sold his home. What does all this mean for the Toronto Real Estate Market (and the Raptors)?

In this month’s edition of The Monthly Outline, we provide you with key information, stats, and charts covering:

• February 2021 Results – talking points that go beyond the headlines

• Why Year-Over-Year Tracking Won’t be Enough – trying to compare 2021 monthly results to a skewed COVID impacted 2020 is going to be darn right confusing come April. We’ll discuss various multi-year data sources that can help you make sense of the chaos.

• Mortgage Update – Canadian bond yields and 5-year fixed mortgage rates have started their ascent. Is this a blip or a sign of things to come, and what does it mean for you and your clients?

• Resource / Report Links – a reminder of the various reports/links available for deeper analysis by TRREB zone combination and historical comparisons

Key Takeaways

Toronto results continue their climb upward.  Overall, Feb 2021 vs Feb 2020 sales increased by +53% with all but 2 of TRREB’s 65 zones posting year-over-year gains.  While all property types were up by at least 40%+ (detached, semi-detached, townhomes, condos), condominiums led the way with an increase of +64%.

With respect to average price, the overall TRREB average price exceeded $1,000,000 for the first time ever, up +15% from Feb 2020.  However, the increase in average price varied significantly based on property type (i.e.,  Condos down -3.7% // Detached up +23.1%) and TRREB Zone (i.e., “416 Condos” down -6.4% // “905 Condos” up +5.4% // “416 Detached” up +13.2% // “905 Detached” up +27.8%).

*Important: A key theme for Feb 2021 vs. Feb 2020 results is recognizing that Feb 2020 was an extremely hot month across all property types.  For perspective, last year, Feb 2020 vs. Feb 2019 sales were up +46% (condos +25% and detached +62%) and average price was up +17% (condos up +19% and detached up +14%).   It is important to look at not only year-over-year, but also current year vs. 3yr, 5yr, 10yr averages to keep perspective.

Path to $1 Million – they say a picture tells a thousand words — this one tells a million dollars.  Below is a chart displaying the average price path for TRREB property types over the past 10 years.  The dark black line is the total average price trajectory for all property types, while the dashed blue line = detached, dashed red line = semi-detached, dashed gray line = townhomes, and dashed black line = condos.  Other than the obvious spike in April 2017, the other visible trend is the flatting of condo average prices during 2020, while towns/semis/detached accelerated upward:   

We have access to 38 different combinations of TRREB zone stats which are available on demand, a few overarching themes/takeaways are as follows:

– 416 Condo Recovery Almost Complete: Condo active listings ended Feb 2021 with 1,911 units available which was up +52% from the end of Feb 2020 (1,256 units).  While the +52% year-over-year number sounds high, this has dropped significantly from the year-over-year figures of +194% in Nov, +172% in Dec, and +89% in Jan 2021.  Furthermore, the Feb 2021 active listing count has dropped below the 10-year average for a February, and is only about 15% higher than the 3yr & 5yr averages.  All these signals point to an almost fully recovered “416” condo market.  Expect average prices to start showing year-over-year gains as early as next month which should pick up pace as the year progresses.

– Detached Active Listings Remain Scarce:  A record number of multiple offers are becoming the norm across TRREB as detached inventory remains scarce.  While we would typically expect to see a wave of new listings released in mid/late March, that may not be the case this year, as sellers felt no reason to hold back on a planned listings given a rapidly increasing market.  Given heightened demand/pace of sales, active listings are down significantly as at the end of Feb 2021 vs. end of Feb 2020:

– Halton (down -44%): 399 vs. 715

– Simcoe (down -41%): 236 vs. 397

– Durham (down -29%): 577 vs. 817

– York (down -19%): 1,306 vs. 1,619

– Peel (down -14%): 769 vs. 891

– “416” Zones (down -14%): 938 vs. 1,088  

Projection – given the lack of supply, expect sustained upward pressure on average prices across the board subject to any major “shock” factors.  While no one has a crystal ball, examples of items that could slow the rally include: sustained upward movement on interest rates, government intervention/regulation to slow the market, stalling economic indicators/employment/growth trajectory, etc.

Year over Year Data Not Enough

Once we hit April 2021, you can bet we will be in for a wild statics ride!  Those that rely on year-over-year stats only could find themselves comparing a market firing on all cylinders to a market that was on a complete “pause” in 2020.  Does this provide an accurate picture of what happened?  Yes.  Does it help provide a measure of how 2021 is shaping up?  Unfortunately – No.  With that in mind, it’s worthwhile identifying data sources that can provide more than just a year-over-year comparison in advance of the inevitable.  

– Our first stop is the Stats Outline Packs and Executive Summaries found at the bottom of this email. They include 1yr, 3yr, 5yr, and 10yr comparisons for key stat categories across 38 different TRREB zone combinations. 

– TRREB Market Stats Database: within Stratus+ you can access the data behind the Market Watch Report which provides monthly summaries by TRREB zone for each month back to January 1996.  It takes a little bit of manual labour, but with a few clicks and copy/pastes you can pull data for any month/property type/TRREB zone combination going back 25 years.  This includes information such as sales, avg price, active listings, DOM, and sale vs. list price % difference.

– Home Price Index (HPI): if you are a fan of HPI, the monthly summary report (pdf file) available on Stratus+ makes it easy to quickly compare the current benchmark price by TRREB Zone or Neighbourhood vs. previous year, 3 years ago, 5 years ago or 10 years ago.  There is also a new digital interactive HPI dashboard to help make accessing the information even easier.

– Future Reports: we are always looking for ways to improve our current report format and data sources.  If you have any suggestions on additional data, comparisons, or charts that you would like to see, please let us know!

Mortgage Updates

While your Outline Financial Mortgage Agents are always available to discuss any questions you might have, a few of our most requested topics this month include (note: there are a couple of repeat topics from last month, but VERY important):

– Tax Filing & Self-Employed (almost here!) – Most self-employed / commission income clients have some flexibility with respect to the amount of deductions they claim or how much income they declare on personal taxes (vs. retaining in the corporation).  It is always a good idea to run the pre-qualifying numbers BEFORE you file your taxes as it can have a material impact on your mortgage qualification for not only this year, but multiple years to come.

– Appraisals – with property prices continuing their rapid ascent, it is important to remember that lenders/appraisers base their value on historical sales and not a forecast.  Appraisers will rely heavily on recent comparables (sales typically within the most recent 3 to 6 months) and if there aren’t enough, they are more likely to expand the geographical area and adjust for price than extend the comparison time period.  If you have any questions about appraisals in general or a specific property you are looking at for a client, please contact your go to Outline Financial mortgage agent for more information.  

– Canada 5-year bond yields & 5-year fixed mortgage rates shot upward – now what?  As we noted in last month’s Monthly Outline, 5-year Canadian bond yields show upward, and as expected, we’ve seen 5-year fixed mortgage rates increase between 0.25% to 0.50% across all lenders (refer to the below chart for an illustration of the rapid and recent increase Canada 5-year bond yields from Feb 1^st to March 14^th).  Why should this matter to you, and where are we headed? 

– While you can still access 5-year fixed rates under 2% for high-ratio mortgages (< 20% down), unless you have an existing rate hold, you are now looking in the low 2% range.

– Where do things go from here?  All eyes are on the economy (both Canada & the US as we typically move together).  The more we hear “economic results are better than expected” the faster we can expect the 5-year Canada bond yields – and therefore 5-year fixed mortgage rates — to rise.  As a reminder, bond yields are the markets’ expectation of where the Bank of Canada’s Key Interest Rate will be in the future – i.e., the market is currently trying to project when inflationary & economic pressure rise to a point when the Bank of Canada needs to increase their Key Interest Rate (currently 0.25%) which would then impact the banks’ prime lending rates, variable rate mortgages, etc.  So far, the consensus is 2023 before the Bank of Canada makes a move; however, should we continue to receive consistent positive economic surprises, an earlier move upward may not be out of the question.

– Fixed vs. Variable: given the recent increase in fixed rates, there is now a healthy spread of over 0.5%+ between fixed and variable rate mortgages.  While time will tell which strategy wins out, variable is definitely worth a strong look given the flexibility, current Bank of Canada projections, and potential 5-year fixed penalties near all-time highs (given the discount to posted rates / IRD impact).

– To discuss available options, or to develop a customized mortgage plan for you or your clients, please contact your go to Outline Financial mortgage agent directly, or give us a call at 416-536-9559 or email us anytime at hello@outline.ca

Report Downloads

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