To no surprise, March 2021 Toronto Regional Real Estate Board number of sales and average home prices continue on it’s meteoric rise.

What is surprising (to me at least!) is that March 2021 was the single most active month EVER for number of property sold across the GTA. A whopping 15,652 properties changed hands last month. And not a peep from TRREB about it.

Average sale prices have increased again, and this year alone are up $132,000 over December 2020. That’s just plain nuts.

Whenever in the past I’ve seen a combination of both (albeit this is my humble and unscientific opinion) a record number of sales are happening and while prices are escalating drastically, pent up buyers become very active. That being said, we may be borrowing from the down the road buyers and sellers. It’s too early to tell.

We all though are aware that money is cheap and our country’s financial situation requires a vibrant real estate sector. The offshoot from the housing market is huge to our government and today’s federal budget will be interesting to see what becomes of it. Many are asking the Fed’s to help cool an out of control housing market. Will they?

Back to Toronto and the GTA for a moment.

Active listings roughly remained the same from March 2020 and new listings were up 57% over 2020’s numbers. Why is this?

Some are using the low rates and higher prices to sell and move up in value. Take for example if you currently have a $500,000 mortgage and are paying 3.25%. Over 5 years, you would be paying down $70k in principal and about $75k in interest.

Compare that to a $1,000,000 mortgage at 1.85%. Sure, your monthly payment increases about $1650/month. But your principal payment would be roughly $165k after 5 years while only paying an extra $10k in interest.

So, using rough numbers of $20k more a year in mortgage payments, while paying down about $95k year more than before, adding back in the extra interest payments you would be out about $15k over 5 years but in a larger house or better located home.

Of course my advice as always is to check with a competent mortgage broker. They for sure will be able to provide a more accurate picture on the finance side. But you get the idea of where I’m going.

More new listings + more sales + escalating prices = more people able to move up or into a better suited property. This might help partly explain some of the madness we have been seeing in the hot pockets of the GTA?