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2020: The Year in Review
Posted January 21st, 2021 under market updates.
If 2019 was a year of unprecedented increases, then 2020 was even more so, as the market defied the predictions of an overall slowdown due to COVID-19.
Bounceback: When the first wave hit in April and May, prices declined by about $1000–$6000, and sales dropped like a rock, from 800/month to 300/month. But by the end of June, prices had fully recovered, and sales had soared to 900/month and would go on to top 1200/month. The market was back on track as if the pandemic were a figment of our imagination.
See the graph below for a month-by-month comparison of sales in 2019 and 2020. Losses in April and May were more than recovered in the second half of the year.
Sales increases: There were 14,392 new listings in 2020, a slight increase over 14,187 the previous year. However, sales were much higher at 9888, compared to 8920 the previous year, an increase of 10.9%.
The sales-to-listings ratio for the full year was 68.7%, and it was entirely a seller’s market from June onward, putting upward pressure on prices. As a result, prices rose 13%–14.5% compared to 2019, much more than the 6-7% increase that had been predicted for the GTA.
Flips: There were far fewer “flips” in 2020, likely because of the restrictions created by the pandemic. However, for the flips that were completed in 2020, the selling price averaged $144,800 more than buying, compared to a difference of $123,200 in 2019, perhaps implying that flipping was more profitable in 2020.
Selling price: More than 20% of homes sold for more than 105% of their asking price, compared to only 5.4% of homes selling that high in 2019. Meanwhile, 5.7% of homes sold for more than 110% of their asking price, up from only 1.5% reaching that level in 2019.
Final word: Overall, house prices have doubled over the last seven years, which is equivalent to an average increase of 11% per year. The market cannot sustain increases of 11–14% forever; the real value is simply not there to support such prices.
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