Good Morning!

We’ve all heard how the pandemic is changing the real estate market, with people fleeing big cities for the sprawl of the suburbs.

Now two new studies give some idea of how extreme this phenomena has become.

In Toronto, perhaps the Canadian city where the trend is most pronounced, there were almost three times the number of active listings for condos at the end of December 2020 than there were the year before, finds a study by online realtor Zoocasa. That’s 1,972 more condos up for sale than at the end of 2019.

The numbers rise the closer you get to the core. In Toronto C01 neighbourhood, which includes the downtown and entertainment district, active listings rose 3.2 times the number at the end of 2019. There were 989 active listings for condos in December 2020, compared to 310 in 2019. The glut shaved 9% off the median price of a condo here, or -$58,750 to $611,250, said Zoocasa’s Jannine Rane.

Another study by real estate industry advisers Altus Group found that at year-end condo sales were down 22% in the GTA from the year before and down 11% from the 10-year average. In the city of Toronto they dropped by 31%.

In the core, the glut in condos is matched only by office space, as employees work from home and companies reassess their requirements. Altus said office vacancy in the GTA rose to 12.4% in the fourth quarter of 2020, mainly because of an increase in sublets. Office leasing activity plunged 40% from the year before and investment in the sector fell 61%.

Meanwhile, single-family home sales are booming and with them, prices. Sales of detached and semi-detached jumped 81% in the GTA, 25% above the 10-year average. The benchmark price of a new single-family home hit a record $1.32 million at the end of the year, beating the last peak in July 2017.

Altus said low supply and low interest rates are fuelling that run. The pandemic has disrupted construction and “many builders are taking a wait-and-see approach,” it said.

But there’s another star performer in pandemic real estate: the industrial sector. With a vacancy rate of under 2.3%, this market has been extremely tight. Altus said more than 12.5 million square feet of new space was built in 2020, and most of it was leased before it was completed. Rents have increased between 3% and 5%, and investment in this sector rose 5% to $4.6 billion in 2020.

Another 12 million sq. ft. of industrial space is now under construction in the GTA and this should help ease the tight market, said Altus.