May 2021 Market Review
May 2021 Review
Market activity has continued to slow down in May 2021 compared to April 2021. The Toronto Regional Real Estate Board (TRREB) reported 11,951 sales in May 2021, an increase of 160.1% in output from May 2020. May has historically been the month with the strongest sales of any given year, however May 2021 has fallen short of the usual increasing trends for sales. With the slow decline in COVID-19 cases and ease in social restrictions, there may soon be another surge in activity, but at the present moment the pandemic continues to impact the population.
Looking into the different geographic pockets of Toronto and the Greater Toronto Area (GTA) we notice that the number of transactions in May 2021 compared to that of April 2021 showed the following changes. In the Toronto area: 5.14% decrease in transactions for detached properties; 8.2% decrease for semi-detached properties; no change in transactions for townhouses; and 16.3% decrease in transactions for condominiums. In the GTA: 12.0% decrease in transactions for detached properties; 5.6% increase in transactions for semi-detached properties; 8.9% decrease in transactions for townhouses; and 17.5% decrease in transactions for condominiums.
Increasing Sale Prices
On TRREB, average sale prices in May 2021 have reached an all-time record high of $1,108,453, up by 1.1% from $1,090,784. When comparing May 2021 to May 2020, the average sale price for Toronto and GTA areas increased by 37% for detached properties, 22.6% for semi-detached properties, 26.2% for townhouses, and 9.1% for condominiums.
What trends are we seeing?
The deceleration of sales suggests prospective homebuyers could be worn out from the fast-paced market. Sellers are seeing fewer offers being brought on offer night and buyers are less inclined to be in a multiple offer situation. There is uncertainty regarding the decline in employment rates and implementation of the new mortgage stress test which may stall the market’s bustling activity to a simmer. The work from home and school from home trends may not be around long enough to justify the purchaser’s frenzy and this may indicate return to the downtown core and the condominium segment.
What lies ahead for 2021?
When considering headlines regarding a slowing real estate market it is important to keep in perspective the aggressive pace that the real estate market had been increasing and that sustained activity at the levels seen in the first three months of 2021 is unlikely. The proposition of potential market intervention by the government along with possible interest rate increases sooner than previously expected may result in a more balanced and healthier market. We are still of the opinion that as social mobility escalates globally there will be an influx of immigration to Toronto and GTA codes which will provide continued support to the real estate market.
Footnote: Source of statistical data is from the May 2021 Market Watch report of the Toronto Region Real Estate Board (TRREB) MLS.
Monthly Percentage Change in Number of Units Sold –May 2021 – Illustration A
Month-Over-Month Average Price Percentage Change – May 2021 – Illustration B
Seasonally Adjusted Month-Over-Month Average Price Percentage Change – May 2021 – Illustration C
Monthly Percentage Change in Average Sale Price – May 2021 – Illustration D