2020: A year end review.

Wednesday Dec 16th, 2020



Well, that was interesting….
January always feels fresh and new and full of promise for the coming year. Who would have thought that just a couple of months down the road, our entire lives would be turned upside down? It’s impossible to talk about 2020 without talking about COVID and how it has impacted our lives. Amid all the uncertainty, the real estate market has - almost counterintuitively, had a record-breaking year.


Before the initial lockdown in mid-March, buyers were dealing with what had become the “norm” in recent years – low inventory and multiple offers. Then, everything came to a grinding halt. Showing activity dropped 66.1% from the first half to the second half of March, offer registrations dropped 60.7% for the same time period1. There was a very short-lived window of opportunity for buyers to get into the market while others panicked. But the longer-term market response was surprising. Generally, when demand falls, supply remains steady and sellers have to adjust their prices. This time, the supply never materialized and multiple offers came back with gusto.

Real estate was soon declared an essential service and recognizing the need to move forward, agents adapted to the new way of doing business. This meant virtual showings, zoom meetings, e-signatures, and e-transfers, and once people became more comfortable viewing homes in person – the obligatory mask and hand sanitizer. Despite the ongoing pandemic, the market came roaring back. Much of the usual spring market, delayed due to lockdowns, moved into summer. Average sale prices continued to increase year over year, by November, TRREB market watch statistics show home sales in the GTA up by 24.3% compared to the same time last year. The average selling price for all home types was up by 13.3 percent to $955,615 2

CHANGES IN THE MARKET, a continued lack of supply and a move out of the city

So where have people been buying homes this year? It’s a tale of two markets – the downtown condo core and suburbia. As people were forced to work from home, with spouses and children crowded together, space became more important. Tellingly, according to a recent survey, the pandemic directly influenced only 6% of Canadians to sell their home, while 29% found that they needed more space3. Even in suburbia, low supply was the norm – further spurring a sellers’ market.

Demand has been strongest for detached and semi-detached houses, and townhouses, with condos, lagging. The pandemic has in many ways forced our hands in adapting to technologies for remote work. With the ability to work from home, those buyers with dependable employment shifted their focus to areas further from their places of work – much further than had previously been the trend. Many suburban markets have been profoundly impacted by out of town buyers, who are expected to continue to drive market activity in 2021. It wasn’t unusual to see first-time buyers in Caledonia, Brantford, Guelph, Cambridge, and elsewhere. Not only did properties in these markets offer more space and bigger backyards, but comparatively lower price points to large cities. The pandemic intensified an already rising trend, especially with young families looking for more affordable homes.

Conversely, buyers benefited from more choice in the condo market. TRREB market stats for November show that the number of condo listings has almost doubled compared to the same period, last year4. According to BILD, new condo sales are down 32% from a year ago, and down 20% from the 10-year average5. The pandemic has created a virtual standstill of immigration and travel and many investors have begun to “dump” their units as rental rates fall and Airbnb guests have all but vanished. Beyond that, there are numerous condo projects nearing completion – many of which were purchased on speculation. These units will now flood the market, likely further weakening condo prices. For those buyers looking to buy a condo for their own use, this presents a unique opportunity. Some analysts believe that this is a short term trend and that prices will rebound once the pandemic is under control. Once immigration and travel activity resumes, there will likely be pent-up demand, particularly for rental units. To counteract the shortfall caused by covid, the minister of immigration has recently announced a revised immigration plan. The previous target of 351,000 newcomers for 2021 has been increased to 401,000 with an additional 411,000 target in 2022 and 421,000 in 20236.


This past month, City of Toronto staff recommended a “vacant home tax” starting at 1% of the assessed value for properties that are left vacant for more than six months of the year. The city estimates that a tax would bring in between $55 and $66 million in tax revenue annually. The official objective seems to be to increase housing supply by forcing some owners to sell, although the projected tax revenue at a time when the city is hurting financially, seems a more likely motive.


This year, interest rates fell to record lows, which meant that people felt more comfortable buying as their monthly payments became more “affordable”. The Bank of Canada has recently stated that they intend to keep the interest rate at 0.25% until “economic slack is absorbed”, which they forecast will be sometime in 20237. Some economists believe that the demand that was spurred by low-interest rates following the first wave has largely petered out and with limited population growth, ongoing unemployment, and lack of consumer confidence, some parts of the housing market (specifically those regions suffering job losses due to lockdowns) – are likely to be weak8.

As is common this time of year, many organizations have come out with their own - often differing - projections for 2021. From an anticipated 5.75% price increase according to a Royal Lepage survey, a 9% price increase forecasted by the Canadian Real Estate Association, to a 7% anticipated drop by Moody’s Analytics. But the market has previously defied expectations and my personal feeling is that low interest rates will continue to drive the market in suburbia, where “affordable” homes under a million dollars (the threshold for buying with less than 20% down) are still attainable. This comes with a caveat: without changes to lending policies, 2020 will drag down mortgage qualifying income for those who have experienced job loss.


At the beginning of the pandemic, bank regulators allowed mortgages to be deferred for a period of up to six months. Some 16% of mortgages took advantage of the program, which ended in September9. We all held our breath for the “deferral cliff” – what everyone presumed would be a large number of defaults as people could no longer keep up with payments. What happened? So far, not much - 83% of deferrals have gone back to normal repayments as of this quarter10. Additionally, the default rate on deferred mortgages and other loans is LOWER than pre-pandemic levels11. Although this is good news only time will tell how well Canadians manage their obligations - in the event they aren’t able to keep up with payments, the issue won’t show up for a few months.


Traditionally, the real estate market moves in cycles with spring and fall being the busiest. This year has been different. The sudden lockdown at the very start of spring effectively pushed the selling season into summer. The month of December is usually slower with fewer listings as most people are preoccupied with Christmas – however, I am still seeing many multiples of offers as people continue to buy in anticipation of prices continuing to increase in 2021. For those looking for a “winter deal” – those may be hard to come by.


I’m usually wary to make predictions – this year more so than in others. Here’s what I do know; we all need a roof over our heads. My advice heading into 2021 would be to think long term and not take on more house than you can afford. For those buying their first home, my advice hasn’t changed from previous years - look at properties with the potential for a secondary unit to help supplement your income.



See you next month! And as always - if you need honest, unbiased advice, whether you're looking to buy or sell - I'm only a call, text, or email away. 



dir: 416.525.1206








1.Ntoukas, Costa “Re: BrokerBay - Covid 19 Updates (Mar 31st)” Message to Kate Czaplinska. March 31 2020, email

2. Toronto Regional Real Estate Board. (December 2 2020) GTA REALTORS® Release November Stats

3. PR & Content Manager | RE/MAX Canada Lydia McNutt is an award-winning journalist and editor. “Canadian Housing Market Outlook (2021): RE/MAX Canada News.” RE/MAX Canada, 3 Dec. 2020, blog.remax.ca/canadian-housing-market-outlook/.

4. Toronto Regional Real Estate Board. (December 2 2020) GTA REALTORS® Release November Stats

5. “GTA New Home Market Solid in October.” 26 Nov. 2020, bildgta.ca/news/newsreleases/GTA-new-home-market-solid-in-October--. Accessed 2020.

6. Immigration, Refugees and Citizenship Canada. “Government of Canada Announces Plan to Support Economic Recovery through Immigration.” Canada.ca, Government of Canada, 30 Oct. 2020, www.canada.ca/en/immigration-refugees-citizenship/news/2020/10/government-of-canada-announces-plan-to-support-economic-recovery-through-immigration.html.

7. News, Bloomberg. “Bank of Canada to Restate Low-Rate Guidance in Wednesday Call - BNN Bloomberg.” BNN, 8 Dec. 2020, www.bnnbloomberg.ca/bank-of-canada-to-restate-low-rate-guidance-in-wednesday-call-1.1533529.


9. editor, Daniel WongContributing. “Canadian Banks Still Have Over 254,000 Mortgages On Payment Deferral.” Better Dwelling, 12 Nov. 2020, betterdwelling.com/canadian-banks-still-have-over-254000-mortgages-on-payment-deferral/.

10. Received by Kate Czaplinska, 5 Reasons Why I'm Bullish Heading Into 2021, 10 Dec. 2020. Abramowicz, Jake

11. Larock, David. “Top Five Things to Know About Your Mortgage Right Now.” Move Smartly, www.movesmartly.com/articles/top-five-things-to-know-about-your-mortgage-right-now.


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