TRREB’s March GTA Data.

It’s a fact by now that some people, in anticipation of these market reports are at the edge of their seat bursting with enthusiasm, while others are shaking their heads at the potential ‘bubble burst’. It’s not easy to imagine the market keep going up in this trajectory for so long. But we have experienced a similar situation not too long ago and we could even attempt at predicting where things are headed.

When comparing this year’s March to that of 2020, let’s keep in mind that last year, the month started very strong, but due to the emergency lockdown courtesy of the big bad ‘Rona (happy anniversary!), the latter half of March saw a depressed amount of activity. This year, we have seen a 97% increase in sales year-over-year.

In fact, this year outpaced some of other record setting years, including 2017. The activity on the market and the soaring prices are begging the question whether the government will intervene to cool things off, like it did in April 2017.

In the GTA, the average sale price across all asset types climbed to $1,097,565, which is 21.6% increase since last year. This price point is a historic high and it doesn’t show any signs of slowing down.

Prices this Q1 have rose 13% for detached, 10% for semis, 11% for condo townhomes and condo apartments broke from the downward streak and rose 5% year over year.

Déjà vu?

Let’s rewind to the good old 2017, the time when we didn’t fathom the idea of living in the lockdown for a year and where things were normal. Well, perhaps not in the real estate market, things were very much abnormal during that time…

The market was scolding hot and the price chart very much resembled this year. In fact, March was so hot that the government decided to intervene and in April, introduced two changes. One was the 15% foreign buyer tax for all non-residents. The second one was the stress test that would make people purchasing with less than 20% down payment to qualify at a higher interest rate. Later that year and throughout 2018, the interest rates were also hiked up. As a result of these measures, the average GTA home prices cooled 13% across all home types in Q3.

Is the government going to intervene to cool the market off this year?

The scolding hot market always comes down to the basic economic concept of supply and demand. With the demand for housing that we are experiencing today, we need more supply. If we start seeing more listings hit the market in the next little while, perhaps there wouldn’t be a need for the government to intervene and the market will sort itself out on its own.

However, if things don’t work themselves out, the government might need to make an intervention, just like they did in 2017. The rumor has it that the government might make an announcement with the federal budget release on April 19. This is definitely just a rumor, so time will tell, but there is a talk of intensifying the stress test, which may not be a great news to some buyers. Time will tell.

Are you looking to make an investment or buy a home in Toronto? Let’s hop on a Zoom call and explore your options, contact me up here.