CoronaVirus Effects on Toronto Real Estate Market (COVID-19) March 2020

Toronto Real Estate Market Sales are up 45.6%! Average Prices Up 16.7% amid CoronaVirus (COVID-19) fears! CoronaVirus impacts on the Toronto’s Real Estate Market, March 2020!

This is a thorough review about what’s going on in Toronto’s Real Estate Market! Here you read about the CoronaVirus (COVID-19) effect on Toronto’s real estate Market and how the corona virus will impact the market and capital markets! This report, in addition, includes forecasts and Supporting Data to our Past Forecasts. And also how the Market Meltdown would impact real estate in Toronto.

*Read More: The latest news on Toronto’s Real Estate Market.

CoronaVirus Impact on Toronto’s Real Estate Market, April 2020 (COVID-19)

Toronto Housing Market Overview Amid CoronaVirus fears:

March 2020 has started with a total of 7,256 resale transactions reported through TREB’s MLS in Toronto’s real estate market. That was a historic 45.6% increase in the number of sales compared to last year similar time in Toronto’s real estate. On top of that the average home price in Greater Toronto Area (GTA) has been $910,290, which is OVER 16.7% price increase Year over Year in Toronto’s housing market!

CoronaVirus (COVID-19) impact on Toronto’s real estate Market:

Meanwhile CoronaVirus effect in the capital markets was heavy in February. Toronto Exchange Composite Index hit the highest 17,944 on February 20th, then dropped to a low 12,700 on March 12th, which is a HUGE 28% melt down in almost two weeks!!

On the other hand, the Toronto real estate market, was the strongest since 2017, amid all the COVID-19 pandemic panic. I, as a Toronto Real Estate Agent and investment analyst, have seen more investors entering the real estate market when the forecast of the stock market seems volatile to them. If you look at the REITS (Real Estate Investment Trusts) stocks, you’d see among the huge meltdown in all other sectors, the REITs are performing relatively better than other stocks ( less plunge we see in those stocks) . Especially residential REITs. The symbols that I recommend you to follow are : REI.UN ( RioCan REIT ) and CHP.UN ( Choice Properties REIT ) .

Real estate in GTA has been a safe long term investment for many. Speculators also have enjoyed the waves here and there, but one important thing to remember is that the buyers who drive the market are not all speculators. They are First buyers, Up sizers, or downsizers, who actually need a roof for living. Many of the buyers are actually end users, second comes the cash flow investors. Speculators are not a big part of the market here.

Is there a FOMO in  real estate market?

As someone who works with buyers and sellers in Toronto’s real estate market, I’d say that the FOMO has returned to the market, and much more buyers are competing on the properties more than a couple months ago. Numbers also support that, number of sales increased by 45.6% and the number of active listings dropped by 33.6%, which puts even more pressure on the standing inventory. That being said, amid CoronaVirus fear, I forecast even higher price increases in Toronto’s housing market for the next month! That’s in the opposite direction that the stock market moves currently!

What will happen to the markets if the CoronaVirus (COVID-19) gets under control:

If the CoronaVirus gets under control in Canada, i.e, they find a cure for it, or somehow control it, the confidence will get back to the stock market. If we look at the lessons learned from SARS, we’d realize that the CoronaVirus will be controlled at some point, that’s when the markets, especially stock markets, would start rising again. In that case the money that flows to the stock sector would be a relief to the Real Estate Market. But again the FOMO might cause a minor bubble for the stocks as well. Which will eventually be corrected sooner or later after that.

But until that time, I think the real estate market in Toronto would be subject to higher price appreciation.

How Bank of Canada decisions affects Toronto’s Real Estate Market, ( the interest rate cut amid CoronaVirus ):

If you followed the news a couple weeks ago, you might have seen that BoC reduced the overnight rate by 50 basis points. Which big banks also gave it to the consumers. So Mortgages would become more affordable, which is another drive for the real estate market! Also the stress test would be amended in April, however, many experts would say that won’t change the affordability level extremely!

If you look at the stress test issue from the consumer’s standpoint, you’d see that, in the past year ( Feb 2019 to Feb 2020) the Average Home price in Toronto increased by 16.7% if you divide it by 12 month, you’d see that the average home price is increasing by 1.4% a month. So if an average home price in Toronto is about $910,290 , then the average price increase is $12,660 in a Month!! So if the affordability increases by 4% hypothetically, the price increase within 3 month would absorb it anyways. Thus I recommend home buyers that are out there to consult their mortgage brokers and REALTORs to get into the market ASAP.

We’d predicted this market a few months ago and had encouraged home buyers to use the opportunities as soon as they could grab them. Read our past blogs about Toronto’s real estate market and predictions for 2020 here.

General Supply and Demand levels in Toronto’s real estate market ( LOWEST since April 2017):

Active listings and Month of Inventory, are other indicators to keep an eye on. We started March 2020 with a total active listings of 8,816 which is drastically down from last year’s 13,284 listing’s in the same month. That being said, the Month of Inventory (MOI) decreased to 1.2 Months of Inventory in all property classes in Toronto’s real estate market. This is the LOWEST inventory level since April 2017, when the then government of Ontario decided to meddle and control the market by introducing Ontario’s Fair Housing Plan.

Predictions and Tips: We continue to predict that the pressure on the current and new inventory in 2020 could result in a double digit price increase in some of the property classes Both Freeholds and Condos. (for more predictions and analysis read below the articles)

Toronto Area (416) Housing Trend and Charts ( past four years):

The below charts and numbers provided are for the Toronto Area (416). For more information please contact us.

Average home prices in Toronto (416 area) had an increase of 17.7% to $989,218:

Toronto’s Hot Condo Market ( Condos up Over 18% YoY):

Toronto’s Condo Real Estate Agents finished the month with 1,335 condo apartment sales in the past month through Toronto Real Estate Board MLS system. Condo apartment sales in Toronto increased approximately 26% compared to last year from 1,058 to 1,335 units sold amid CoronaVirus (COVID 19) fear.

Active condo apartment listings for sale on the other hand declined. Thus, same as previous months, we keep predicting the decline in the number of active listings and also the increase in the number of sales would put a lot more pressure on the current condo market. So we still foresee more price increases and more bidding wars in the next months to come.

Month of Inventory, is the LOWEST since April 2017, decreased to 0.9.

Predictions and Tips: If you are looking to buy a condo as an investment you must be informed about the new levels of inventory that would affect the current balance between the current supply and demand. If you have been looking for a moment to sell and cash out, now is a great time to market your property with all the biddings that are going on. You can contact a Top Toronto real estate agent to get it done.

The Average condo apartment price in Toronto’s $722,675, which is over 18% increase in prices, YoY!

Toronto’s Detached Houses (Detached house prices are up 14.4% !) :

If you’ve been following our market analysis, you’d already know that we had predicted it in 2019 that “Detached houses are on the rise again” for 2020 in Toronto. If you are a buyer, keep that in mind that you need to be more educated when entering the Detached homes market!

Get help from a Top Toronto Real Estate Agent! I believe that the buyers must be educated in order to get the best out of this hot market! Ask your Realtor to give you a thorough Real Estate Market Analysis before entering the market.

Toronto’s Realtors sold 716 houses through TREB this past month. The average price of a Detached house in Toronto’s $1,485,304. This is a 14.4% hike in Detached Home prices. We were predicting it several months ago and I was advising buyers to get into the market asap if they could.

The number of sales also increased by 53%! We were predicting in 2019, that house buyers should expect a huge hike in Toronto’s Detached Homes prices in 2020 and way more competition when it gets to offers and purchases.

Month of inventory is a good indicator that shows the OVERALL supply/demand situation in each area. It has been 1.5 ( LOWEST since April 2017) . That inventory level defines a seller’s market in Toronto’s real estate.

Buyers and sellers encouraged to read below this article for more details.

Semi-detached and Townhouses:

In Townhouse and Semi-Detached homes market in Toronto we had a competitive market as well. The average price of a Townhouse in Toronto has been $$1,062,246 and the average price of a semi-detached house in Toronto has been $1,208,073! For more detailed info about these sub markets you can contact us!

Comments and Predictions for home sellers, March 2020:

Each micro market in Toronto has different behaviour from over all Toronto’s Real Estate Market. Our real estate market report is a complete overall market update for the city of Toronto resale homes. If you wanna know about your specific neighbourhood, you still need to look at the stats in your own micro pocket. For more information you can talk to your real estate agent or if you don’t have any, find a Top Toronto real estate agent in your area.

In general, as we’ve been predicting since last year, Toronto’s sellers, especially in Freehold properties, would have the upper hand in 2020 if they adopt the right marketing strategy when they decide to sell ( depending on the property and marketing strategy).

So if you need to sell and get the max for your home, the next few months could be good months to market your property. Especially when you have less competition in the market while other sellers are not in the market yet.

Comments and forecasts for home buyers, March 2020:

Buyers are going to continue to face a very competitive real estate market in Toronto in the next few months in 2020. We see that it will keep getting worse for buyers. So if you need a home to live in, wait no more! Healthy and relatively low interest rate which causes less expensive borrowing costs combined with higher demand and less inventory, can cause more multiple offers on condos and more pressure on Toronto’s Real Estate Market. Even CoronaVirus can’t cool down this market! Read the first part of this article to know why!

As a buyer in 2020, you need to have your winning strategies in place. Get educated about your target market through a great real estate agent. You can find all you need to know to get educated about Toronto’s real estate here. Be prepared for competitions proactively. Have your pre-approvals ready.

If you are looking for condos, have a solicitor ready to inspect status certificates for you before preparing an offer. If you are looking at houses, have an inspector or a top REALTOR next to you.

We continue to predict a high pressure on freehold properties in 2020, so if you are looking to purchase a house, detached or Townhouse, you should consider that and get in the market before it’s too late. In case you’re wondering what’s the best time to buy a home in Toronto you can view this link. This article can give you a better idea of when’s the best time to buy in Toronto.