Toronto Condo Sales Down in April, Prices Plateau Amid Buyer Fatigue

Months of soaring real estate prices, bidding wars and tighter pandemic restrictions finally took a swipe at Toronto condo sales in April. Condo transactions fell for the first time, since a red-hot ascent that began in December. An ascent fuelled no doubt by constant talk of a ‘bubble’ that was about ready to burst.

In April, there were a total of 2,477 condo sales transactions; down 17% from March’s peak of 2,978. Inventory levels, meanwhile, remained relatively stable with 2,618 units on the market; just a 6% increase from the month prior.

Prices plateau after hot upward climb; no bursting ‘bubble’

Potential homebuyers hoping to enter the housing market saw some relief in April as prices levelled off. The average price-per-square foot for a Toronto condo was $882, just a $3 dollar decline from the previous month.

Despite the traditionally-slow winter market -- real estate prices began their steep ascent in December, fuelling speculation that property values were being propped up by artificial demand. But Strata.ca realtor, Francisco Hiebert, believes this recent plateau is a sign of the market cooling off. And the dramatic burst that many had been anticipating? He says it just isn’t going to happen.

“That sudden rise in demand over the winter had solidified people’s beliefs that we’re in a bubble...a bubble that was eventually going to burst. But I don’t think we’re going to see values plummet like that. If you look at the numbers, prices per-square-foot are still lower than what they were right before the first COVID-19 lockdown,” explains Hiebert.

Market cooling because ‘some people are giving up’

Bubble or no bubble -- Cliff Liu, a broker at Strata.ca, believes the red-hot condo market is cooling on its own.

“The market seems to be correcting itself without the government getting too involved. This is because buyers were trying to get in as prices climbed over the winter. That whole time though, all we heard about were bidding wars and condos selling for $100K over asking,” says Liu.

And according to him, that’s when people scampered away and buyer fatigue set in. Liu believes this is why we saw the condo market cool in April. He expects this pattern to continue for another couple of months.

“I had some listings for sale, and we did see some action. But it was way below our expectations. My seller clients are hoping the market will pick up again once this lockdown lifts. But my buyers are hoping prices will plummet after April’s plateau,” says Liu.

Strata.ca realtor, Sam Massoudi, also believes buyer fatigue is the reason behind April’s falling numbers. He says some abandoned their search as the market soared, thinking they were priced out for good.

“If you were looking for a 1-bedroom at $550K last year, that same unit is now closer to $600K. Some people are giving up altogether because it’s not easy to come up with an extra $50,000 that quickly,” explains Massoudi.

He suspects many would-be buyers decided to take advantage of the rental market, which has dropped by more than 10% in the past 12 months.

Still though, Strata.ca agent Milan Mitrovic blames April’s lower sales numbers on the latest pandemic lockdown. When it comes to seeing condos in person, his clients’ biggest fear is exposing other family members to COVID-19.

“That’s why some of them have avoided all contact with older relatives, so they can continue their property search. I’d say it’s not so much buyer fatigue that’s holding them back. It’s more like pandemic fatigue at this point,” says Mitrovic.

For journalists: If you’d like more information on this report or would like to receive future news releases, please send your requests to media(at)strata.ca.