Consumer confidence, low rates continue to drive GTA home sales

For the third straight month of 2021, record home sales continued in March across the Greater Toronto Area, with buyers taking advantage of favourable borrowing costs and improvement in many sectors of the economy.

According to the Toronto Regional Real Estate Board (TRREB), GTA realtors reported 15,652 sales in March 2021 – close to double that of March 2020. While sales were strong, it is important to remember that for the second half of March 2021, the performance is compared to the initial impact of COVID-19 in the second half of March 2020, when sales activity dropped off dramatically.

There were 6,504 sales reported during the first 14 days of March 2021 – up 41 per cent compared to the pre-COVID period in March 2020.

Economic recovery

In addition, the 9,148 sales reported between March 15 and March 31, 2021 represents an increase of 174 per cent over the COVID period of March 2020. This is a stark reminder of the initial impact COVID-19 had on the housing market and overall economy a year ago.

“Confidence in economic recovery coupled with low borrowing costs supported a record pace of home sales last month,” says TRREB President Lisa Patel. “While the robust market activity is indicative of widespread consumer optimism, it is also shedding light on the sustained lack of inventory in the GTA housing market, with implications for affordability.”

“With sales growth outstripping listings growth by a large margin, including in the condo market segment, competition between buyers in some market segments and the potential for double-digit price growth could continue without a meaningful increase in the supply of homes available for sale,” adds TRREB Chief Market Analyst Jason Mercer. “This will become more apparent as population growth resumes over the next year.”

The average selling price in March 2021 hit $1.09 million, up 21.6 per cent over March 2020. Following the recent trend, lowrise home sales in regions surrounding Toronto drove price growth.

Unintended consequences

“The current state of the market has reinvigorated discussions about potential demand-side policy interventions,” says TRREB CEO John DiMichele. “Policies focussed on demand, such as a capital gains tax on primary residences, can have a short-term impact, but can also be fraught with unintended consequences like further stifling the supply of listings. The federal minister responsible for the housing portfolio has said his government will not entertain such a policy option, which is the right decision. We have been saying for too long now that policymakers must focus on the long-term goal of increasing housing supply in order to accommodate current and future demand.”