It’s no secret that the housing market has been booming since the early days of the pandemic, but just how crazy is it? The Toronto Regional Real Estate Board (TRREB) recorded home sales at the second-highest level on record for October 2021. Inventory remains at an all-time low, with new listings down almost one-third compared to October 2020.
In the Oakville residential area, buyers spend roughly $1.3 million on a new home, up over 30 percent from last year. The average detached house is selling for $1.679 million, an increase of 33 percent over 2020 prices. With inventory continuing to decline, many residents are forced to move out of the area to acquire an affordable home, if we consider “affordable” as stretching families to their financial limit. And while the price of a home has increased significantly, there have been fewer actual sales across most of the Greater Toronto Area (GTA), except for the condominium market, which has made a strong comeback. The number of homes sold through the MLS® System of the Oakville-Milton and District Real Estate Board showed an overall decline of 15.5% compared to the same time last year.
While it may sound discouraging for the home buyer to see such inflated house prices, the strong market represents a rebounding economy, a reason to be optimistic.
“The tight market conditions across all market segments and areas of the GTA is testament to the broadening scope of economic recovery in the region and household confidence that this recovery will continue,” said TRREB Chief Market Analyst Jason Mercer.
However, with that comes a renewed need for affordable housing solutions and experts agree the government needs to step in.
“The only sustainable way to address housing affordability in the GTA is to deal with the persistent mismatch between demand and supply. Demand isn’t going away. And that’s why all three levels of government need to focus on supply. The federal government has stated that collaboration with provinces and municipalities is required. This collaboration could be spearheaded, at least in part, with housing-related incentives tied to federal infrastructure investment,” said TRREB President Kevin Crigger.
So, if demand is so high, it begs the question – why is inventory so low?
For one thing, housing development slowed considerably during the pandemic, with some builds just starting to pick back up again. And while builders may now have the green light, soaring lumber prices have made construction more costly and complex. The supply chain has been backed up for almost two years which results in even more delays. Existing plans have either been scrapped altogether or require builders to accept losses, neither a favourable option. In many cases, projects have been put on hold until corporations assess the pandemic’s overall impact on the construction sector.
Outside of Toronto, many suburbs have seen changes in zoning to protect the Green Belt. While this is a positive for protecting the environment and green space, much of the current zoning is outdated and requires a new strategy to consider the growing population while protecting vulnerable areas.
In addition, many homebuyers who at one time could list their home knowing they’d find something quickly once it sold are now afraid that low inventory means not finding a property in the area they want or at the price they can afford. Bidding wars also turn many homebuyers off. The high stress of multiple bids and a highly competitive market create a better argument for staying put and upgrading the current home instead.
Wherever you sat on the spectrum this year, it was undoubtedly an exciting market to watch.
By: Julie Achtermeier
