Increased market activity in stage two of reopening the economy
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Although we saw a sharp decline in market activity during the onset of the COVID-19 pandemic, we’ve now entered stage two of reopening of the economy and we can see a further increase in market activity.
For June 2020, 8,701 sales were reported through TRREB’s MLS System. This result represented a substantial increase over the May 2020 sales result, both on an actual (89 per cent) and seasonally adjusted basis (84 per cent), and down by only 1.4 per cent compared to June 2019.
New listings were up slightly on a year-over- year basis by 2.1 per cent. However, active listings at the end of June 2020 were down by 28.8 per cent compared to June 2019. Growth in new listings will need to outstrip growth in sales for a number of months before active listings approach last year’s levels.
The average selling price for all home types increased by 11.9 per cent to $930,869, compared to June 2019. The actual and seasonally-adjusted average selling prices were also up substantially compared to May 2020, by 7.8 and 9.8 per cent, respectively.
Pent-up demand pre- and post-COVID
Following the broader movement to reopen the economy in June, we experienced a very positive result in terms of home sales and selling prices. Before the onset of COVID-19, there was a great deal of pent-up demand in the market. This pent-up demand arguably increased further over the past three months. We are still in the early days of recovery, but barring any setbacks, we should continue to see stronger market conditions in the second half of 2020, as households look to satisfy their ownership housing needs.
It will be important to closely monitor housing market conditions as economic recovery continues in the second half of 2020 and into 2021. Policymakers should proceed cautiously with any demand-side stimulus. The persistent lack of listing inventory in the GTA understandably took a back seat to COVID-19 related issues in the short term, but supply should once again be top-of-mind once the recovery takes hold, in order to ensure longterm affordability in the GTA.
In order to further gauge the impact of COVID-19 on the GTA housing market and to gain insight on what the future holds for housing demand and supply, TRREB undertook a second poll of consumer intentions through Ipsos between May 25 and 31, 2020. The key findings from this poll was very much in line with the results from the April 2020 poll. Buying intentions remained strong across both surveys, with respondents indicating they were likely to purchase a home in the next 12 months. In terms of listing intentions, although up from the April Ipsos poll (21 per cent in May versus 17 per cent in April), the result remained well below the 32 per cent listings intentions mark recorded in the spring of 2019.
Again, we can recognize a gap between buying intentions and listing intentions, which demonstrates a broader trend exhibited in the GTA over the past few years. Furthermore, this gap underpins the requirement of policymakers to take action on the housing supply front, both in terms of aggregate supply and increasing the diversity of housing types available to home buyers.
Lisa Patel is President of the Toronto Regional Real Estate Board, a professional association that represents 54,500 professional realtor members in the Greater Toronto Area. You can contact her at firstname.lastname@example.org. For updates on the real estate market, visit trreb.ca.