Now that fall is here the real estate market is sending us puzzling signs. The GTA benchmark house price has continued to rise; however, condo prices are beginning to drop, and the market is running into strong headwinds.

Homebuyers were sidelined March through May, but in June through August, they jumped back into the market with both feet. House purchases in July and August were the highest ever for those months. Is the market settling into a 'new normal'?

We are watching several key risks:

• A record number of condo apartments for sale and supply is trending higher at an alarming rate. A flood of supply could cause an acceleration of price declines.

• In early September, new cases of COVID-19 were low but rising toward a possible wave 2.

• How well the U.S. manages the pandemic - roughly 25% of the Canadian economy relies on exports south of the border. As well, the US presidential election is just weeks away.

• The CERB and the mortgage payment deferral programs expire at the end of September. These have delayed the full impact of the pandemic on housing.

The frenzy of the last couple of months has calmed somewhat but many pockets of Toronto are still insanely competitive. New freehold listings have been increasing weekly. Sold listings were up 32% last week and of those 74% sold at or above the list price. Hot neighbourhoods like Riverdale and Leslieville had 66 sold properties last week and 56 properties sold above the list price in competition.

The condo market is seeing a record number of new listings come to market. Last week in the downtown core we saw 714 new listings. That is the highest amount we have seen all year. Sales did improve, up 27% from the previous week and the activity was strong with 42% of condos selling at or above the list price. Condos selling below $700K lead the way.