February 2020 – Market Anaylsis

February 2020 Review

The February 2020 Real Estate market was characterized by three defining factors:  a notable increase in successful sales, a moderate increase in new listings available and an upwards climb in the average sale price of all homes recorded on the Toronto Regional Real Estate Board’s (TRREB) MLS. 

Across the GTA there has been an impressive 45.6 percent increase in sales throughout February 2020, compared to the 10-year sales low felt in February 2019. Narrowing in on a month-to-month comparison, we are happy to see positive momentum with 7,766 sales reported on MLS in January 2020 and 8,914 sales reported in February 2020 – that is a 14.8 percent increase.  

Interest Rate Cuts and Upcoming Stress Test Changes

On March 4th 2020, the Bank of Canada dropped its interest rate down by half a percentage point to 1.25 percent from the previous 1.75 percent. Several Canadian banks shadowed this move by simultaneously decreasing their prime lending rate to 3.45 percent, down by 50 basis points. These cuts have been motivated by the recent COVID-19 outbreak, with the hopes of softening the economic impact of the outbreak and offsetting any major market drags.

On April 6th 2020 the OSFI mortgage stress test requirements will ease up.  Currently the stress tests applies to those getting insured mortgages and requires that they can afford a payment based on the five-year posted rate; calculated by the typical big-bank rates.  After the change is implemented an improved benchmark rate will be used for the stress test.  The rate utilized for the test will be based on the five-year fixed insured mortgage rate plus two percent.  Based on today’s current rates that would be a 30 basis point reduction for those subject to the stress test.  The stress test was originally implemented in hopes of protecting consumers from defaulting on their loans, in the event that interest rates increased. This resulted in many Buyer’s losing some of their purchasing power. The decreasing impact of the 2017 Ontario Fair Housing Plan and the OSFI mortgage stress test will now allow Buyers who have been inactive to enter the market.  This will continue to drive a particularly strong year-over-year sales growth within the detached segment of the housing market. 

Increasing Sale Prices 

Comparing February 2020 to February 2019, the year-over-year average selling price for all home types combined increased by an impressive 16.7 percent. TRREB is predicting an additional 10 percent price growth to be felt throughout 2020 – it’s encouraging to see this price growth impacting most major market segments including detached homes.

It’s important to note that sale prices are accelerating at a much quicker pace than the rate of new listings. There was only a moderate 7.9 percent increase of new listings recorded on TRREB’s MLS, comparing February 2020 to February 2019. It’s predicted that with this continued supply constraint and increasing demand from Buyers, sale prices and therefore competition between consumers will continue to accelerate throughout 2020.

Is Now a Good Time to Act?  

If you’ve been considering entering the Real Estate market, now is a good time to act. As a Buyer, the recent interest rate cuts and upcoming changes to the stress test will increase your purchasing power. From a Sellers perspective, average sale prices are expected to keep increasing, creating favourable market conditions for Sellers across all market segments. We welcome and encourage all of our existing and new clients to connect with us in the upcoming weeks to learn more about when the right time is for you to enter the market, based on your specific product time and real estate goals.

February 2020 – Market Analysis

Monthly Percentage Change in Number of Units Sold – February 2020 – Illustration A

Month-Over-Month Average Price Percentage Change – February 2020 – Illustration B

Seasonally Adjusted Month-Over-Month Average Price Percentage Change – February 2020 – Illustration C

Monthly Percentage Change in Average Sale Price – February 2020 – Illustration D




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