By Altus Group | January 27, 2021

Altus Group data reveals that GTA new home sectors saw growth over previous year and homebuying intentions remain strong into 2021, while commercial investors take wait-and-see approach 

January 28, 2021 – Altus Group, a leading provider of software, data solutions and independent advisory services to the global commercial real estate industry, today released its 2020 year-end data on new homes sales and commercial transactions, which provides a comprehensive review of the real estate market in the Greater Toronto Area (“GTA”). The Altus Group data highlights the performance of investment property sales volumes, land markets, commercial leasing and the new home sectors in the GTA.

Overall year-over-year percentage change in relative performance by market activity in the GTA:

Overall year-over-year percentage change in relative performance by market activity in the GTA 2020

With a slow start to 2020, due to the COVID-19 pandemic, overall year-over-year investment activity in the GTA dropped by 23% compared to a year ago. “2020 was an unprecedented year across the real estate markets as consumers, developers, investors, and owners quickly adjusted to changes brought on by the pandemic,” said Matthew Boukall, Vice President, Product Management, Data Solutions at Altus Group. “Despite these challenges, investments continued to be made, demand for new housing remained robust, and the market adapted to a rapidly changing environment.”


2020 GTA commercial real estate market highlights

Investment activity slowed at the start of the year due to investor uncertainty before increasing in the second quarter, but not at the same levels compared to 2019. Investor confidence slowly increased in the second half of the year but finding investment product and bridging the price expectations between buyers and sellers proved to be a challenge.

The industrial sector was the star performer in 2020, with an increase in investment activity of 5% from $4.4 billion in 2019 to $4.6 billion in 2020. The remainder of the asset classes fell, most notably the office sector by 61% to $1.6 billion. Residential investors were active in the second half of year with land sales only decreasing by approximately 2% year-over-year to $5.0 billion. Apartment property transactions dropped by 37% mainly due to the lack of product rather than demand.


The GTA office availability rate rose to 12.4% in the fourth quarter, largely due to the increase in sublet space which accounts for almost a quarter of the available space. Similar to 2019, office leasing activity in 2020 was led by the financial services and tech sectors but was down 40% year-over-year. Over 8 million sq. ft. of new office supply is currently under construction in the downtown area alone. Despite the anticipated new supply, almost 65% of the space is already pre-leased. Office demand continues to be influenced by employees working from home and companies continuing to reassess their office requirements.

The industrial market also continued to struggle with a low availability rate of just under 2.3%. Despite the more than 12.5 million sq. ft. of new space completed in 2020, most of this new supply was leased before completion. Due to the low supply, rental rates continued to increase between 3% to 5%. The over 12 million sq. ft. of industrial space currently under construction should help to ease the tight market conditions.


2020 GTA new home market highlights

In 2020 total new home sales were 37,669, up 5% from the same period in 2019, and 3% above the 10-year average. Single-family sales, with 16,973 detached, linked and semi-detached houses and townhouses (excluding stacked townhouses) sold, increased 81%, and were up 25% from the 10-year average. The benchmark price of a new single-family home in the GTA finished 2020 at a record $1.32 million, surpassing the peak reached in July 2017. Low inventory as well as low interest rates have resulted in upward pressure on prices. Additionally, new supply was disrupted by the pandemic resulting in delayed launches and some cancellations. Many builders are taking a wait-and-see approach.

Condominium apartment sales accounted for 20,696 new home sales, down 22% from the previous year, and down 11% from the 10-year average. New condominium apartment sales in 2020 in the City of Toronto dropped by 31% to 9,983. However, the benchmark price of a new GTA condominium apartment reached an all-time high for the second year in a row, closing the year above the $1,000,000 mark. On a dollars per sq. ft.  basis, the condominium apartment benchmark price ended the year at $1,072 per sq. ft., up 8% from 2019.


Home buying intentions

GTA homebuying intentions have held up relatively well during the pandemic, with more households planning to buy homes in 2021, according to Altus Group’s FIRM Survey conducted in late 2020. Homebuying intentions among renters – the primary pool for potential first-time buyers – are well ahead of intentions in late 2019 but have softened since a spike in the summer months. Current homeowners expressed that they are just as willing to buy a home in the next year and intentions have grown since the summer. Despite the pandemic creating uncertainty with respect to the economic and job outlook, persistent low interest rates are providing support for the strength in homebuying intentions.

The desire for homeownership remains strong among renters under 45 years of age, with 10% currently shopping for a home, another 20% saying they are still saving for a down payment on a home, and fewer than 10% indicating they prefer the renter lifestyle.


About Altus Group Limited

 Altus Group Limited is a leading provider of software, data solutions and independent advisory services to the global commercial real estate industry. Our businesses, Altus Analytics and Altus Expert Services, reflect decades of experience, a range of expertise, and technology-enabled capabilities. Our solutions empower clients to analyze, gain insight and recognize value on their real estate investments. Headquartered in Canada, we have approximately 2,200 employees around the world, with operations in North America, Europe and Asia Pacific. Our clients include some of the world’s largest real estate industry participants. Altus Group pays a quarterly dividend of $0.15 per share and our shares are traded on the TSX under the symbol AIF.

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