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After hitting a peak in March 2021 and slowing down in April, the number of home sales in the Greater Toronto Area has continued on a downward trend in May (according to the Toronto Real Estate Board’s MLS® System). However, although there’s been a drop, the figures remain strong — there were far more sales last month than in May 2020, and the average selling price in the area also reached an all-time high.
In May 2021, there were 11,951 home sales, Greater Toronto REALTORS® reported. That’s more than twice as many as the same month last year, when COVID-19 was in full swing. It’s not quite as many as the May home sales record of 12,789, which was achieved in 2016 — but significantly above the average sales figure in May, which stands at 10,336 (as measured between 2010 to 2019).
May is typically the month that sees the highest sales figures of the year, but this wasn’t the case in 2021. This year, March took the lead, with 15,646 deals taking place throughout the month.
Why? The most likely explanation is that the effects and timing of the pandemic have had more impact on trends than typical market forces. With everyone spending all their time indoors while lockdown measures were in place, demand for home ownership grew — and this trend was strengthened by the low cost of borrowing.
However, eventually, the majority of people searching for properties had already made purchases, explaining the slowdown in home sales after March 2021. With a lack of population growth, there were simply fewer potential buyers.
Still, the MLS® Home Price Index Composite Benchmark increased by 19% year-over-year in May this year, demonstrating the continued strong demand for home ownership. The average selling price has also gone up, reaching an all-time high of $1,108,453 after rising 28.4% year-over-year. Between April and May 2021, the average price also rose — even after adjusting for seasonality.
This price increase can be explained by the strong competition between buyers. With more properties purchased, there have been fewer property listings, which has increased the prices of the limited numbers of homes on the market. This trend has taken place for condominium apartments as well as more ground-oriented homes.
The government and policymakers are now recognizing that housing supply has become a serious issue that they need to combat through effective measures — especially in southern Ontario, where there’s a severe supply shortage. Once this problem is tackled, areas that currently face shortages will be more likely to attract people and businesses due to the increased affordability.