Top Ten: Burning Questions For 2021

Opinion | January 4, 2021

That was, by far, the most “time off” I’ve had in a long, long while.  Thinking back upon it now, everything seems just a wee bit blurry.

What a magnificent two-and-a-half weeks it was!  And considering how 2020 went down for just about everybody on this globe, it’s an honour and a privilege to refer to any period of time this year as “magnificent.”

How in the world did I get 2 1/2 weeks off?  And was I actually “off,” you ask?

It all started on Wednesday, December 16th.  This was the last day I had in the office, and the last day I had out in the world.

As I wrote in my year-end blog, my wife and I had consulted with our family doctor and resident COVID expert to put together a plan enabling us to see my mother over the holidays, and thus I haven’t been “out there” in eighteen days.

A reader commented on the year-end blog, something about my plans to spend time with my mother, and COVID, and I deleted the comment.  You may have read the responses that followed, beginning with my note about how this is the first comment I had deleted in a decade, and ending with many other readers’ thoughts and reactions to the pandemic, the government’s ‘rules,’ and who among us should be doing what.

One reader commented that I probably don’t do anything without putting in 110%, and I appreciate those sentiments.  But I also agree with that first would-be commenter, who followed up and said that people seem to have a “me-first” mentality, and everybody wants to think that he or she knows best, or is able to skirt the rules for reasons A, B, or C.

I would be remiss if I didn’t say this: my wife’s aunt works in infectious diseases down in Atlanta, Georgia, and told us about COVID in December of 2019.  She’s been our go-to for information since the pandemic began here in Toronto last March.  She’s on the front lines, and she’s predicted everything that’s happened so far, in succession, including both the timing of a vaccine and the strength of a “second wave.”

I’m sure everybody out there believes him or herself to be a subject-matter expert on COVID, but we took actual expert advice on how to proceed.

So having last left our house on December 16th, my wife, two children, and myself, stayed inside our house for seven straight days.  We didn’t interact with anybody, didn’t step off our front lawn, and didn’t see another soul.  On December 23rd, we went to a private clinic and paid to have tests for each of us with a same-day turn-around, and voila!

Four negative tests later, and not having been in the outside world for a full week, we were able to have my mother come over on Christmas Eve, wake up and open presents with us on Christmas morning, then stay for another two nights thereafter.

We continued not to see another living soul, and only interacting with my mother, right through this past Sunday.

Many days, we’d pile in the car and drive to my mother’s house.  I would head upstairs to my second home-office to work while the kids would play in the basement with my mother and my wife.  Other days, my mom would come over to our house and would often be convinced to stay overnight by my 4-year-old daughter who wanted to wake up and see “Grammy” in the morning.

The last two weeks were an absolute blessing!

I’m telling this story, in part, because my personal life is and always has been a part of Toronto Realty Blog.  You’d be surprised for me to come back after the holiday break and not tell you how I spent my time, right?

But I’m also telling this story as a way to illustrate that there are responsible choices made during all of this.  There’s no one-size-fits-all solution out there for everybody.  To lump our choices in with that ‘guy who threw a birthday party for his daughter with a dozen of her friends’, or ‘that couple who had a sixty-person wedding over New Year’s,’ is unfair.  But it’s also dangerous since misinformation about COVID is just as big a problem as the virus itself.  Combine that misinformation with uninformed opinions, fearmongering, and public shaming, and where do we go as a society?

Monday, January 4th is the first day I’m back “out there” again, and we won’t see my mother until after she’s obtained the vaccine, and even then, we’ll tread carefully.

I hope you folks were all able to enjoy your own little slice of Heaven, whatever that might have been, over the last couple of weeks.  Now here we are, in the dregs of January, back at work, and turning the conversation back to the Toronto real estate market.

In case the foregoing wasn’t an obvious indication, the COVID-19 pandemic, I do believe, will once again have an overbearing effect on the Toronto real estate market.  What began on March 17th, 2020, and lasted through the year, will continue into 2021, likely through the summer, and I predict well into the fall.

So with that in mind, two things should come as no surprise to you:

1) That I’m starting the year with a predictions/questions blog post, that may or may not span multiple posts.
2) That the first of these “Ten Burning Questions” is incredibly obvious.

1) Will the pandemic continue to affect the market, and if so, to what extent?

In short: yes and a lot.

But the longer answer begins with “it depends,” and then segues off into a thousand different directions, under a seemingly-infinite number of possible scenarios.

At the onset of the pandemic in March of 2020, the question surrounding the interaction of a pandemic and the real estate market wasn’t so much about price, but rather about the process.  Recall that the market came to a screeching halt and we saw GTA sales drop from 8,012 in March down to a paltry 2,975 in April when the pandemic was at its “peak.”

Now, what do I mean by “peak,” exactly?

The pandemic was new, unknown, and scary in April of 2020.  The government declared a state of emergency on March 17th, and the world began to move accordingly.  Knowledge about the virus, or where society was heading, was at an all-time low.

The “peak” of daily reported cases this past December does not coincide with the “peak” of pandemic fear and confusion in April.  In fact, cases were hovering around 500 per day back in April, which is a pittance compared to the 2,500 per day we grew accustomed to seeing over the last few weeks.

When the pandemic first began last April, very few people in the city of Toronto were thinking, “Now is a good time to list my home for sale.”  By the same token, very few people were out there buying either.

I remember sending a house in Leaside to clients in late-March, thinking the $2,350,000 list price was decent.  I told them, “This is a good buying opportunity.  Everybody else out there is scared!”  That sounds like sales-speak, right?  Imagine me, trying to tell people to buy a house in the face of a worldwide pandemic?  But I told them to keep an eye on it, and if it sat, we could get it for far less than the list price.

I figured we could have had the house for $2,250,000 about one month later, but my clients didn’t want to go see it.

They waited until May to ask to see it, but it had already sold: for $2,200,000.

That same house, listed for sale today, would sell in a flash for $2,600,000.

Alas, those clients never bought a home.

Hindsight is 20/20, I know.  But nobody was buying in April of 2020, as evidenced by the 63% drop in sales from March to April, and consider that the March sales figure would have been well over 10,000 if not for the state of emergency being declared on March 17th, and I think the drop in “activity” was somewhere around 80%.

Do you remember the arguments about open houses in April and onward?  I just flat-out, stopped doing them.  I didn’t see any real upside, and I will admit, I silently judged those agents who did host open houses, in the midst of a pandemic.

Do you remember going to see properties in April?  Masks, gloves, hand sanitizer, and only one buyer through at a time.  It seemed so odd the very first time I went through a house, but like all of us, in all walks of life, I got used to it.

I was watching a movie with my wife and mother over the holidays, and during an airplane scene, my Mom said, “It’s so weird seeing people with no masks on, just inches away from each other.”  As if on cue, my wife and I both immediately remarked, “I was thinking the same thing.”

Call it sad, or call it an achievement among society, but we all got used to this way of life.  And as we move forward in 2021, we’re all going to continue doing the same things that kept us safe in 2020.  So when it comes to the Toronto real estate market, I believe that even though cases are quintuple that of April, the knowledge we possess and the processes we’ve carved out are what stand in the way of a depressed market like what we saw last year.

There are home-owners out there that might not sell because of the continued pandemic just as there are most certainly buyers who might not pull the trigger, but in the context of supply-and-demand, I expect these two sides to even one-another out.

I don’t believe that the 2021 Toronto real estate market will be as affected as 2020, but we’re still going to think, feel, and experience COVID in everything we do, and that includes buying and selling real estate.

2) How will January and February set the table for the rest of the year?

You might see this as a continuation of the question above, but I would probably ask this question of any market in any year.  The fact that the market at the start of 2021 will be affected by the pandemic is merely that “proof” part of the proverbial pudding…

As of Christmas Eve, the Ontario government has put us in another lockdown, with another set of restrictions, set to last 28 days.

One might argue that we should expect the Toronto real estate market to be non-existent in January, not only because of the lockdown and restrictions but also because, well, it’s January.  This is, historically, one of the slowest months of the year, every year, without fail.

I do believe that January will be slow as a result of the Provincial lockdown, but I also think this might simply cause the market to explode thereafter.

Remember what happened last year?

A quick refresher of January over the last nine years:

We saw 4,581 sales in January of 2020, which was far more than in 2019 or 2018.

You want to look at the 5,155 sales recorded in 2017 and say, “Well, it’s not even close to that figure,” but don’t forget what early-2017 was: the craziest market we’ve ever seen!

And at times, early-2020 felt the same.

Recall my blog post from February 10th, 2020: “Does January 2020 Feel Like January 2017?”

If you look at the ratio of sales to new listings, or SNLR, you’ll see that the 58.5% recorded in January of 2020 was second only to January of 2017.  And while 2020 was still 12.0% lower than 2017, it was still 11.2% higher than any other January on the list.

Anecdotally, I can tell you, as I have done repeatedly over the last year, that January of 2020 was especially hot in the downtown condo market where we were accustomed to seeing multiple offers on just about every entry-level condo.  January was hot in the entry-level freehold market as well, specifically those 3-bedroom, semi-detached houses on the east and west sides of the 416.

The stats above might not do last January justice, and of course, this continued through February as these stats will demonstrate:

Note that the sales-to-new-listings ratio increased from 58.5% in January to 68.4% in February, and keep in mind, this is the GTA, and this is all property types.

Once again, February of 2020 was second only to that absurd February of 2017, which saw an SNLR of 81.5%.  If you ever wanted to ask, “Why did the market appreciate so rapidly in the spring of 2017?” there’s your answer.

The “feel” out there in the market in February of 2020 was even crazier than January.

Recall my blog post from March 9th of 2020: “February TREB Stats: Chaos Is A Ladder”

February of 2020 provided the third-highest month-over-month increase in average GTA home price in any month from 2012 through 2020.

It’s also important to note that the 416 condo market increased a whopping 6.4% from January to February, which was wholeheartedly felt “out there” in the trenches of the market.

January and February of 2020 were not the same as that of 2017, but it was the closest thing I’ve felt since, and the closest thing I’ve probably felt in the years that preceded 2017 as well.

So what then should we expect in 2021, as a result?

Well, if the market in January is short-changed due to the 28-day lockdown, then I think February might be one of the hottest on record.

3) Where will the 416 average home price go?

The risk of redundancy in these “burning questions” is already apparent, but we’ve made so much of average home price over the last twelve months that I really don’t want to belabour this point.  Except, well, we have no choice.

Average home price is the be-all and end-all of real estate.  It’s most-examined, most-reported, most influential real estate statistic or metric that there is, and for good reason.  After all, if you’re a home-owner, you probably don’t care how many homes like yours are selling nearly as much as you care how much they’re selling for.

The average GTA home price peaked in April of 2017 at $920,791 before dropping thereafter, and it took over three years for that figure to be surpassed.

Once that $920,791 “record” was beaten in June of 2020, however, we saw the average home price set four more records, as average home prices in June, July, August, September, and October all increased in succession.

We came into 2020 with an average home price in Toronto hovering somewhere around $850,000.  And I say “hovering somewhere around” because the December home price is always depressed, in this case, down to $837,788 in December of 2019, and it might make more sense to look at the peak fall months of September, October, and November, which in this case, showed us prices of $843,115, $852,142, and $843,637 respectively.

These prices, of course, pale in comparison to that $920,791 “peak” from April of 2017, but consider that the average home price increased from $770,745 in January of 2017 up to $920,791 in April – a jump of 19.5% in three months.  Was that ever sustainable?  I mean, if the government hadn’t stepped on the throat of the real estate market in late-April, 2017, would we have seen this continue?

I bring up 2017 not only because we saw the average Toronto home price in 2020 surpass that year’s peak, but also because we saw a level of consistency that I don’t recall seeing ever before.

I mentioned those “five straight record months,” and this is the consistency I speak of.

June: $930,869
July: $943,710
August: $951,404
September: $960,772
October: $968,318

Have we ever seen a five-month period with this level of consistency before?  Throw in the $955,615 in November and we’ve got a period of a half-year where prices continued to rise, but also within a narrow price-range.

For comparison purposes, here’s a five-month period in 2018:

March: $784,558
April: $804,584
May: $805,320
June: $807,871
July: $782,129

This is about as close as I can get to replicating that consistency we saw in 2020, except that in the three middle months – April, May, and June, we saw virtually no increase, and prices dropped in the last month.

Compare that to June-through-October of 2020 and we see prices increasing each month, significantly, and consistently.

So now let’s move away from the word “consistency” and let me introduce a similar word, but one that has more far-reaching implications: stability.

Is there price stability in the market?

A naysayer would argue that an increase in average home price from $839,363 in January of 2020 to $968,318 in October (or even $955,615 in November) is simply not stable.  It’s not viable.  It makes no sense, it can’t last, and we’re in trouble in 2021.

might agree if not for the fact that we saw that rare level of consistency, month-to-month, from May through October, and the November price only declined from $968K to $955K.  In this case, the stability is based upon the consistency, and I expect to see these numbers act as a floor in 2021.

The average home price in December will likely be released by the time you’re reading this blog on Monday, January 4th, or shortly thereafter.  I could see a drop as low as $920,000, since December is always a depressed month.  But don’t read into that.  Wait until we see the February number, as January will also be depressed (it is every year, and this year will be worse due to the lockdown), and then into March, April, and May.

I am willing to bet that the TRREB average home price in March, April, May, and June demonstrates the same level of stability and consistency that we saw from August through October in 2020

Any takers?




Okay, who actually thought my “Ten Burning Questions” would fit into a single post?

Let’s break for lunch here, and come back to Question #4 on Wednesday…

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  1. Appraiser

    at 9:39 am

    Unofficial December 2020 TRREB sales data for GTA, year over year:

    Condo sales 2,571 (+34%)

    Freehold sales 3,843 (+36%)

    1. J G

      at 9:25 am

      How’s the price for 416 condo? How’s the month of inventory for 416 condo?
      LOL, joker.

      1. WalterG

        at 2:48 pm

        You go buddy! Keep flogging the bad news about that one depressed slice of the market! The one that most of us don’t give a damn about! But hey, you know better than any of us jokers! FAANGs rule!

  2. Marty

    at 10:32 am

    I actually think there is going to be more good news than bad over the next 2 moths re COVID.

    As I type this we just got the new cases for the last 24 hours, it’s under 3,300. Which of course, is high compared to December 1 or November 1, but it likely means the X-mas “surge” might have been less serious than some feared.

    I think we will see good vaccine news over the next 2 months.

    How this reflects in real estate, I’m a bit more optimistic than David is in #1 above. I’d say “yes” it will affect market, but I’m not going to say “a lot”, or at least a lot negatively.

    If we see something that looks even remotely close to “back to normal” by late spring or summer, then I think we more or less reset back to 2019 at this time, plus usual increases.

  3. Professional Shanker

    at 11:04 am

    The reopening and mass vaccination will be a headwind for RE (as a whole) in 2021/2022 given that much of the money allocated to RE (including renovations, etc.) during 2020 will be reallocated to travel/leisure, restaurants, anything outside of one’s home. This won’t crash prices at all but will restrain price increases which is probably a good thing given the price increases in detached and rural in 2020.

    Will 2020/2021 represent a buying opportunity for condos, interested to hear everyone’s opinion on this, especially in the context of office work post pandemic?

    1. BHT

      at 11:35 am

      i think there will be two people who want to go back to the office for every one person who would prefer to work from home

      this is just anecdotal, from amongst my network of mostly downtown office workers.

      some companies have doubled down on increasing office space (amazon & shopify). maybe that is just a unique situation since those companies have been doing well.

      best case scenario – maybe we come out of this with a 4 day work week with one flex day where employees chose to work from home. I think that would really help a lot of working parents.

    2. Kyle

      at 2:33 pm

      Will be interesting to see what happens once vaccines are more widely distributed and we return to a new normal. How much of the forced austerity brought on by the lockdown will stick? What are people going to do with that estimated $90B in personal savings that they’ve been accumulating?

      IMO, i see downtown condo prices rising once Toronto’s two downtown universities go back to in-class learning, which i fully expect to happen as soon as it’s remotely safe, possibly even this Summer. I don’t think either of our two downtown universities will switch fully over to online learning, because A) they’ve made massive investments in RE and facilities, B) Their reputations would suffer if they offered online courses and C) International students paying for in-class learning are their golden goose.

      I think the most likely scenario for the majority of office workers will be some limited percent of WFH (i.e. 1-2 days per week). I also foresee some of the people who have made the move out of the City needing crash pads in the City.

  4. Appraiser

    at 11:39 am

    The 416 condo “buying opportunity” (ie. bottom of the market), has already passed.

    416 condo inventory has declined from the peak in mid-October (6,576 listings for sale) down to 3,771 active listings at the end of December.

    Also: Condo sales in the 416 were up 9% in December over November!

      1. Appraiser

        at 7:50 am

        With inventory dropping rapidly while sales are increasing – which direction do you think prices are headed?

    1. J G

      at 9:26 am

      LOL, why didn’t you buy then?
      I even offered you incentive last month if you showed the purchase agreement.

  5. Jenn

    at 11:51 am

    Happy New Year, David!

    Very touching intro today about your family. Good for you for being a good son.

    Looking forward to another year of free real estate advice LOL

  6. Natrx

    at 1:45 pm

    I think condo rental market is most interesting. Now of course it seems owners are holding out expecting a sharper recovery starting mid-year.

    1. Appraiser

      at 2:46 pm

      Please explain. Why is the rental market “most interesting” and what are owners “holding out” on?

      1. Natrx

        at 3:37 pm

        Toronto downtown condo rental rates keep dropping, but some kind of recovery expected at some point, but very little on anything updated. This is the only segment that really stands out relating to Toronto housing in a negative way.

        1. Appraiser

          at 7:58 am

          So the “most interesting” segments of the market that “really stand out” are the negative ones?

          Says a great deal about one’s perspective on the real estate market.

          1. Natrx

            at 1:19 pm

            Seeing rents down to 2014 levels isn’t interesting? It is to me since I’ve worked and lived in that environment during this whole downtown transformation. I’m heavily weighted in real estate and plan to buy my parent’s detach not too long from now, so excuse me if I’m not 100% oblivious to something this such an outlier. Then you see the absolute amount of listings with huge pricing variants, that’s also interesting. I’ve read comments people would rather keep it empty and wait for recovery expected this year then to lock in a lower paying tenant. I bought my small, suburb detach investment rental right before the condo market really took off since I had choice between the two. It’s only now the tables have turned so that’s also interesting to me. Maybe there is a good deal to be had on a double dip if rental rates stay low and vacancies high longer then expected as landlords come to grips with what may be worse then expected.

  7. Joel

    at 2:10 pm

    Less money spent on commuting and clothes is going to leave more money for savings and homes. I don’t see any way that prices move down over the year.

    I think the $2 million + segment is going to be very busy this year as people want more space inside and out.

  8. Dan

    at 11:52 pm

    My burning question is about interest rates and the five year outlook on the city if we continue to see 1.79% rates for another 12-18 months. I realize the government can’t raise rates in a post-pandemic recovery but they’re really just kicking the can down the line as housing prices will continue to skyrocket and affordability is way worse in five years. Thoughts?

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