Welcome to the July 2020 Monthly Update from Our Trusted Realtors.
Toronto Regional Real Estate Board (TRREB) released its Marketwatch report for the month of July 2020. The statistics are as follows:
- The total number of sales in July, 2020 was 11,081. This number is up 29.5% from the number of sales in July, 2020 when there were 8,555 sales. Sale of 11,081 homes translates to >357 homes sold every day for the entire month of July i.e. almost 15 homes sold every hour.
- The number of new listings was also up by 24.7%, a significant increase for the first month of Summer when the market usually slows down because people go on vacation. However, the inventory still remains tight because the increase in percentage of homes sold is higher than the increase in the percentage of new listings.
- The average selling price for all home types was up by a whopping 16.9% on a YoY basis compared to July, 2019 at $943,710. Even on month-on-month (MoM) basis, the average selling price increased by almost $13,000.
- The MLS Home Price Index Composite Benchmark is also up by 10% on YoY basis.
The following infographic paints a quick summary for you.
GROUND-REPORT & OUR ANALYSIS
By all means, as reported by TRREB, this was a record July on the books.
However, a deeper analysis points to insights which are not that obvious from looking at the overall sales numbers. Please look at the following graphics.
This graphic shows us that price growth is strongest in the low-rise home types. It is this graphic that explains us the consumer behavior. Let us understand the reasons:
- On the ground, we have seen more balanced conditions in the Condominium Market. We have also seen a relative weakness in the rental market. Our hypothesis is both these factors are intertwined – driven by COVID-19.
- The Condominium Market is traditionally driven by both Consumers (people who purchase to live in the property) as well as Investors. Due to COVID-19, the immigration this year has been zero. Therefore, we are seeing a less robust rental market and lesser number of investors purchasing condominiums.
- Typically, ~48%of the total sales on MLS is represented by new immigrants but it takes them two-three years before they can purchase their new home. We all know that immigration has been very strong in the past few years. These immigrants are young professionals employed in higher paying jobs. Therefore, we are not seeing any negative impact on the sale of homes, especially low-rise homes.
- . In many cases, the new ‘want-to-be-homeowners’ are accelerating their purchase schedule due to all-time low interest rates. As an example of lower-interest rate, the monthly mortgage payment on a $900K home is cheaper by $375 than it was 15 weeks ago.
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HOW DOES THE FUTURE LOOK?
The negative effects of COVID-19 are yet to be seen in the Real Estate Market. Many Economists and Financial Institutions continue to caution about a potential downturn by those whose jobs have been impacted, especially as the government support-programs start to fade.
We are also seeing a slight increase in the number of new listings. However, this increase in the number of new listings must continue for several months before we come to a balanced market conditions (from a supply & demand perspective).
For the uninitiated, our current inventory is running at 1.9 months. Inventory <4 months is usually a Seller’s Market; inventory >6 months is a Buyer’s Market; and inventory between 4-6 months is a Balanced Market.
Most Economists, were predicting 2020 to be the Best Year for Real Estate. We remain optimistic that 2020 will be the Fourth Best Year Ever.
This optimism is supported by the statistics Realtor.ca published recently for July 2020 compared to the same time last year:
- 10.7 million unique visitors, up by 46%.
- More than 447,000 leads, a 51% increase
LINKS TO MEDIA REPORTS
Following are links to just a few of the media reports.
At OurTrustedRealtors, we pride ourselves on our focus to your personal and complete satisfaction. We view numbers such as sales results as nothing more than a reflection of our commitment to serve our clients. We believe success is not in the number of deals, but in the way we work with people and community. You can expect your real estate transaction with us to be a great experience. Your success truly is our success.
This fulfillment is more important to us than charging an unconscionable fee for our services. We charge 1% for listing your home. If you are buying a home, we give you a cash-back (a portion of the commission we receive from the seller) - usually, this cash-back ranges between 1 to 1.5%.
Please call Sanjiv at 416.409.9090 if you have any questions or are about to embark on a real estate purchase or sale.