November Real Estate Numbers - Another Record Broken
2020-12-07 | 07:38:23
Happy Monday Everyone!!
Hope you had a wonderful weekend and you are all staying healthy.
As with the rest of my family, I love taking advantage of winter’s early dusk by driving through neighbourhoods admiring all the Christmas lights adorning people’s homes.
Professionally, this time of year approaching the Christmas holidays meant less calls, less work and more time to start planning for the coming New Year.
Not so this year.
The numbers of people driving the real estate market up continues with many in the industry not knowing if and when it will stop. A COVID vaccine is on the horizon: huge immigration numbers (1.2 million) are promised for the following 3 years; and the opening of the entire economy is now just months away.
Reports from the Toronto Regional Real Estate Board (TRREB) for the Greater Toronto Area show November home sales up 24.3% from 2019.
Since late Spring of 2020, the main reasons why real estate prices and sales continue to go up in Canada’s largest market are:
- Pent up demand during the first shutdown caused by COVID-19
- Government wage subsidy programs
- The lowering of interest rates
- Working from home and needing more space
- Desire to move to more remote areas outside of city centres
- Low inventory - high demand
In the GTA, 8,766 sold in November 2020, up from 7,054 for the same month last year. Because of the continuing demand for single family homes, the average price increased by a whopping 13.3% from $843,307 in 2019 to $955,615 today. Detached home prices increased 15.2% from November 2019 to $1,202,281. Condo prices fell 3% from November 2019 to an average of $605,863.
And despite the activity within the city of Toronto, the suburbs, cottage country and other areas within and out of the Greater Golden Horseshoe, there are those who remain steadfast in believing that prices are going to crash.
In fairness, no one knows whether prices will drop or they won’t.
Remember, months ago, CMHC put out a statement that home prices would begin to suffer an 8-18% price drop once the majority of borrowers who decided to defer their mortgage resumed paying in September/October. Since September, all of the Big 6 banks and other lenders in Canada report the normal resumption of mortgage payments from their borrowers. At RBC, that number is 98%.
Why?
Because the number of people who have had their income drastically affected by COVID are not in as bad of shape that was forecast. Plain and simple!
Regardless of all the reasons listed above on why the real estate market continues to push forward, how you attain a mortgage remains difficult. Sure, low interest rates help but, having to qualify at 3% higher than what you might pay still makes it difficult for many would be buyers. And this is only one of the many factors (let’s call them obstacles) when qualifying for a mortgage.
In short, everything that you read or hear from the media, your realtor, your mortgage agent, your family or your friends, please consider that the statistics listed here are real. For all the short comings and stress that lending imposes on many in our society – way too much – we should remain grateful that the resilience of our real estate purchasing practices tend to mitigate the hurt our economy continues and will continue to experience until a COVID vaccine fully allows it to reopen.
Here below are some stats provided by Mortgage Professionals Canada’s Chief Economist, Will Dunning:
Current renters want to move or buy because:
- 28%: I want to live in a nicer home
- 14%: My home is no longer suitable
- 14%: The current situation makes this a good time to get a deal (NOTE: on some properties in certain areas)
- 12%: Low interest rates make this a good time to buy
- 11%: I want to live somewhere less expensive
For existing homeowners, 38% surveyed said their current home is no longer suitable because of size or location. Another 13% want to live in a nicer home and 12% stated their motivation was based on lower interest rates.
There are plenty of other statistics covering other reasons why homeowners and renters want to move or buy a home. The most important reason they are able to is because - they can. Here below are some revealing stats on the impact that COVID-19 has had on Canadians:
- 20% of homeowners reported impaired income due to COVID-19
- 68% of first-time buyers and 75% of repeat buyers said they would have no difficulty in making their mortgage payments
- 1% of first-time buyers said they would only be able to make partial or infrequent payments (vs. 0% for repeat buyers)
To sum up what these important and positive stats reveal (as of today) comes from Mortgage Professionals Canada President and CEO, Paul Taylor:
“What we have seen clearly is that the vast majority of homeowners are not feeling a long-term financial impact related to COVID-19, and that potential homebuyers are still very much in the market for a home, signs of which are being seen in regions across the country.”
So for those who were on the fence, worried about purchasing a home and went ahead and did so, congratulations!! You purchased your most suitable home because, like 75% of Canadians, the reason you bought your home is…because you need to live somewhere. Only 25% of Canadians purchase their home for the investment aspect of real estate.
For those remaining on the fence, waiting for the real estate bubble to burst, continue to follow the real data and not what is being transmitted through the media.
Ask your realtor and a mortgage agent like me the questions that most concerns your decision to move forward in purchasing a home or, moving from your current home.
Educating and surrounding yourself with the right team will help ease your fears and put you on the right path to either purchase now or wait depending on your personal financial situation.
As always, please feel free to contact me with yours or your client questions. It is my pleasure to pre-qualify or highlight the particulars of one’s financial reality as they make one of the most important decisions of their lives. Whether the time to purchase or move is now or not, the decision will be based on all of the factors required for a borrower when purchasing a home.
Looking forward to your comments, questions and curiosities, I wish you all a great week ahead.
Stay safe!! Stay healthy!!
With thanks,
Marco
