©Copyright by top real estate agent in Toronto/GTA, senior broker, Daisy Huang, February 2022.

With the past year spent amid numerous uncertainties and changes, every year at this time of the year, 「Daisy Realty List®」 publishes a previous-year-end analysis and outlook report of the Toronto real estate market based on big data analysis. I hope to help you grasp the pulse of the market, eliminate noise, focus on certain factors, take history as a mirror, and look forward into the new year.

Whether you live in North America, China, or other countries in the world, the experience of the past few years has been a lot of surprises and many unknowns to everyone, and the uncertainty of the world has intensified. To sum up last year, Daisy thinks that these are two key phrases: “The coexistence with Covid” and the “normalization of inflation”. In this macro-environment, the real estate market in the Greater Toronto Area in 2021 is revolving around one word: “rising”. Everyone has heard or experienced the rise in housing prices last year, and it is no longer news. Daisy Huang will tear down the factors with you today to take a detailed look at CT images of detached houses, townhouses, condos in GTA. This report will be of great help to master the market, and worth collection every year.

Let’s take a look at the 3D breakdown of detached homes in the Greater Toronto Area in 2021:

There are 33 cities/towns in the Greater Toronto Area. The darker the colour of the block in the figure below, the higher the average price; and the higher the column, the greater the price year-over-year increase%. As of the end of 2021, the average price of a detached home in the GTA has surpassed CAD $1.4 million, representing an annual increase of 25%; like last year, the outer suburbs of the Greater Toronto Area have experienced the largest increase due to low base prices.

Specifically, the top three detached house prices in the Greater Toronto Area are occupied by Central Toronto, King City, and Oakville. In terms of increase%, Uxbridge, Innisfil, and Oshawa in the east of the Greater Toronto Area ranked the top three, indicating that there is a strong demand from entry-level buyers and investment in detached houses around GTA.

In terms of townhouses, by the end of 2021, the average price of townhouses in the Greater Toronto Area has reached CAD $980,000, with a year-on-year increase of 22%. The largest %increases are from the periphery of the Greater Toronto Area.

Townhouses also basically abide by the principle that the lower the total price, the greater the increase. The average prices of Toronto Central District, King City, and Markham are among the highest, whereas the easternmost Clarington, and the northernmost East Gwillimbury and Essa recorded the top three increases.

Let’s talk about Condo. The Condo market in GTA is mainly concentrated in Toronto and adjacent Markham, Richmond Hill, Vaughan, and Mississauga. In 2021, the average price of condos increased by 7%, and the average price was close to CAD $700,000. The average price of the traditional C12 luxury residential area in Toronto almost reached CAD $1.4 million. In terms of increase, the E10 district, which is located in the easternmost part of Toronto, came out on top, reaching 22%.

Last year, three districts in Toronto’s eastern suburbs ranked among the top three in terms of average price increase in Condo, while traditionally the three midtown luxury residential blocks with the highest average price were C12 (including Horse Track), C09 (including Rose Valley), and C02 (including Yorkville), their increase% was flat or negative, and the average prices of C09 and C02 areas fell. It is worth noting that the C12 and C09 districts had the highest increase in the previous year. It seems that last year, for these two luxury residential districts, its condo market had a rational correction. In 2021, the price growth rate of condos in the outer periphery of Toronto was higher than that in downtown Toronto. Daisy Huang expects that the price of condominiums in Toronto city center is going to pick up growth momentum in the short future.

Looking forward into 2022, Daisy Huang summarizes into four “unchanged” and one “uncertainty”. The four “unchanged” are:

  1. Inflation expectations remain unchanged. Due to the high integration of global economies and the extremely fragile global supply chain as a result of decades of globalization, inflation is going to be around for quite a long time, and the recent rise in commodities has only added fuel to the fire. Daisy Huang has an analysis article on the cost of condo development and construction previously, expounding the logic of developer costs and new house supply in an inflationary environment. In short, there is no doubt that future home prices will be fundamentally supported by development costs.
  2. Canada’s immigration policy remains unchanged. Talent and human resources are the driving force of a country’s economy. China’s demographic dividend over the past 40 years has created a great economic miracle. Canada, as an immigrant country, is well aware of this. The immigrant population has been growing constantly. The number of immigrants reached a new high last year, all these immigrants form the strong demand fundamentals that support the real estate market.
  3. The situation of “demand exceeds supply” remains unchanged. It is an industry-wide acknowledgement that supply shortage is the biggest bottleneck. The so-called policy measures such as restrictions on overseas buyers or vacancy tax etc have always been proven to be just a storm-in-a-teacup that government stirs just to show its presence, which cannot change the overall situation of “demand exceeds supply”.
  4. The trend of coexistence with Covid remains unchanged. Most Western countries, including Canada, including many Asian countries (such as Singapore), have basically relaxed their mentality and accepted the reality of coexistence with Covid. Based on this, Daisy Huang predicts that in 2022, Canadian economic activities will be significantly more active than that in 2021, which will also have a positive impact on Toronto and Canada’s real estate.

The “uncertainty” mentioned by Daisy Huang above mainly refers to the uncertainty of interest rate hike expectations and the effect of interest rate hikes. The largest inflation in 40 years has forced the central bank to issue frequent interest rate hike warnings. Daisy Huang also believes that the Bank of Canada will follow suit with the US Federal Reserve to take action. However, raising interest rates is a double-edged sword. The current global market is lack of supply and manpower, not demand expansion. Therefore, the rate and pace of interest rate hikes must be handled cautiously, otherwise, there is a great possibility of triggering more supply shortages which will lead to “stagflation” – that is: economic stagnation and inflation at the same time. The central banks of the world are all led by smart people who in fact are not willing to raise interest rates, but the current inflation figures are too ugly, and they just have to do something. Of course, raising interest rates is not necessarily a bad thing for the real estate market. If house prices always go up rapidly in double digits, it will be unhealthy. A cool-off period for consolidation and price re-confirmation is essential to the market’s long-term health. Based on the historical trajectory of the past two decades, a healthy average annual housing price in Canada, excluding inflation, is around 6%.

In conclusion, four “unchanged” factors are positive for housing prices, while one “uncertain” factor is neutral for the housing market and good for its long-term sustainable growth. Daisy Huang forecasts that the Toronto property market in the new year will be dominated by price consolidation and re-confirmation, meaning both buyers and sellers can trade more calmly, the market will still come out healthy and go upward, and there are also quite a lot of opportunities along the way.

That’s it for now, thank you for your time, see you at 「Daisy Realty List®」 next issue.


Originally written and all copyright© reserved by Daisy Huang www.daisyrealty.ca, top real estate agent in Toronto and GTA, senior broker. High Value. Delivered.

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