Greater Toronto’s residential real estate market continued to make headlines in 2011, defying expectations and posting an increase in both sales and average price.

Read full Re/Max housing outlook report

Tight inventory levels throughout much of the year led to a significant upswing in values, with average price expected to close the year at $465,000—up seven per cent over 2010. Home sales are forecast to climb to their second highest level on record—at 90,500 units—five per cent ahead of last year. Strong demand and limited supply set the stage for a year of multiple offers—with sellers firmly in the driver’s seat—from entry-level housing to the upper-end of the market.

Activity in suburban 905 communities (Mississauga, being a part 905 community) also increased as affordability and neighbourhood served to attract purchasers-given that a single-detached home in the 905 area code can sell for as much as 25 per cent less than a similar property in the 416 area code.

Several factors were in play in the GTA during 2011 that contributed to the overall health of the market. Job security spurred buyer confidence, low interest rates and stock market volatility. Foreign investors were exceptionally active in the new condominium market, seeking shelter in a global market.

As per the report, 32 per cent of residential MLS sales this year involved a resale condominium apartment or townhouse. Affordability remains the foremost driver, with the vast majority of condominium sales occurring under the $400,000 price point.

Some projections as per Re/Max

Toronto’s population is projected to rise from 2.72 million in 2010 to 3.36 million in 2036, an increase of 23.7 per cent. Other census divisions of the GTA (Durham, Halton, Peel and York) will experience a significantly faster growth rate. International immigration will drive population increase, while out-migration to other provinces is expected to taper. Unemployment levels remain above the provincial average, but the rate is expected to decline in 2012. The GTA is expected to lead the country’s largest CMAs, alongside Calgary, in real GDP growth this year, hovering at 3.1 per cent and 3.8 per cent respectively.

Heading into 2012, tight inventory levels and unrelenting demand should continue to buoy housing values. Home sales are expected to be strong, rising to 93,000 units by year-end 2012, on par with 2007’s peak performance. Average price is forecast to appreciate further, climbing five per cent to $488,000. Demand is expected to be consistent in virtually every price range as economic recovery ramps up, particularly in the mid to latter half of the year.

Condominiums should continue to enjoy solid activity, supported by a tight rental market and declining vacancy rates. Sales in the top-end of the market are expected to be especially brisk, as more and more purchasers choose a tangible asset like a principle residence over riskier investments in the stock market. A continuation of low interest rates should stimulate home buying activity well into 2012.