16 December 2020 ~ 0 Comments

Why Toronto/GTA real estate prices will continue to rise into 2021

For those of us paying attention to the goings on with the real estate market throughout the GTA, most are putting away our crystal balls usually taken out and dusted off readying for what’s to come in the year ahead.

With me, I’ll save you the drama. Prices are going to rise. Plain and simple. Ontarian’s have proven our appetite for owning real estate is so strong, that even during a once-in-a-century pandemic, it couldn’t make us hit pause on purchasing real estate.

Fact: If December’s sales continue along the torrid pace we’ve seen in the second half of 2020, this year will go down as the 3rd most active year in the Toronto Regional Real Estate Boards history. And all this during a world wide pandemic!

Average prices are way up, slightly above $100,000 over 2019 and currently sits at $929,433.00 for the year.

Governments have learned that real estate contributes quite heavily to our GDP, and plenty of money (think taxes generated) flows into municipal and provincial coffers through many tax and revenue streams.

One stream, Land Transfer Tax, yes this same dreaded tax the former Mayor Miller brought in as his gift to his beloved people of Toronto, will net the municipal and provincial governments some serious cash during these trying, but housing crazed times.

How much you ask? Well, in November alone and only taking into account the city of Toronto sales through the TRREB MLS sold, roughly $96 million in LTT tax was generated. Now, this doesn’t include rebates given to first time buyers, but given our high average prices and the lower rebate threshold, it’s safe to say that even if this number were adjusted downward, to say $75 million, its still a crapload of money in one month!

And this doesn’t included Land Transfer Taxes collected on sales in the 905 (which are more than sales in the 416 but they don’t have the double LTT tax). Add in new construction or commercial sales, development and permit charges, along with income taxes generated from the various spinoff industry related (construction, realtors, lawyers, mortgage brokers, inspectors, appraisers etc) and we can see how JT is throwing money out like Oprah Winfrey used to do with cars! He’s feeling pretty flush is what I mean.

Once you really dig into it you can see why and how much our governments need real estate moving. It also helps explain how we’ve been the leaders in cranes in the sky in North America on and off for years.

In order to fill this housing we need immigrants to come and buy or rent to keep the party going. Watch for these numbers to be at record high levels in the years to come, is my guess.

The demand for low rise housing is creating a wide gap between prices for houses and condos. As this gap continues, watch for condo prices start to rise again and then overflow head back into the new construction side on the high rise side.

Money is so cheap right now, and who really knows for how long this will be? But it’s fuelling massive bidding wars throughout stable and demand neighbourhoods in Toronto.

This past week a client of mine who was considering offering on a semi detached home in the Pocket area in Toronto, decided to pass mere minutes before the offer presentation. 10 offers were already registered and with a list price of $949,000 the house eventually sold for $1,276,000. An average condition house needing at least $25k in immediate work, and then a similar amount over the next few years. and by the way, the house has no parking of its own as well.

So, the remainder of December should continue to show strength and those 9 other Buyers who didn’t get the house, plus any current others like my client who decided to pass, as well as new buyers entering the fray in the New Year will continue to make for a strong real estate market is my thinking. And we might end 2021 with another $100,000 increase in average sales price. I’ll guess we’ll have to wait and see.

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