Home prices across the GTA soared nearly 25% in 2021 as inventory levels fell and competition continued to heat up.
A new report from the Toronto Regional Real Estate Board released on Thursday revealed that the average GTA home price rose to $1,157,849 at the end of 2021 — an annual increase of 24.2%.
Last year also saw an all-time high number of sales in the GTA with 121,712 homes changing hands — a 7.7% increase from the previous record set in 2016 and a 28% increase from 2020. But as demand remained strong, the number of new listings on the market couldn’t keep up, with just a 6.2% increase in new listings compared to 2020.
“Tight market conditions prevailed throughout the GTA, and broader Greater Golden Horseshoe in 2021, with a lack of inventory noted across all home types,” said TRREB Chief Market Analyst Jason Mercer. “The result was intense competition between buyers, pushing selling prices up by double digits year-over-year.”
The average selling price for the entire year came out to $1,095,475, marking another new record for the GTA. This is up a staggering 17.8% compared to 2020’s previous record of $929,636.
“Despite continuing waves of COVID-19, demand for ownership housing sustained a record pace in 2021,” said TRREB President Kevin Crigger. “Growth in many sectors of the economy supported job creation, especially in positions supporting above-average earnings. Added to this was the fact that borrowing costs remained extremely low. These factors supported not only a continuation in demand for ground-oriented homes but also a resurgence in the condo segment as well.”
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In 2020, the real estate industry experienced an influx of homebuyers leaving Toronto in favour of more affordable, outer-lying cities. But 2021 saw a return to the city, with sales in the 416 area code up 36.8% compared to 2020. Surrounding GTA areas saw a lesser 23.6% growth in sales.
As prices are expected to continue to rise in 2022, Mercer says that the root issue of low inventory levels needs to be addressed.
“Looking forward, the only sustainable way to moderate price growth will be to bring on more supply,” he said. “History has shown that demand-side policies, such as additional taxation on principal residences, foreign buyers, and small-scale investors, have not been sustainable long-term solutions to housing affordability or supply constraints.”