Further that we go, the more we see the true impact of Corona Virus (COVID-19) on the overall Canadian and Global Economy. The REAL effect of Corona Virus on Toronto’s real estate market is still unfolding! However markets all across the globe are not the same. That also applies to the real estate market in Canada. You might see all kinds of news headlines about Toronto’s real estate market in the days to come. Reports that we read are ranging from pessimistic reports from the CMHC and or Optimist Reports from CIBC analysts.
But the question is which one is accurate? What will happen to the Toronto’s Real Estate market after the COVID-19 Pandemic?
Let’s dive into Toronto’s Real Estate Market
I’m a Toronto real estate agent who has been analysing, selling, and buying real estate full-time and I have seen many market ups and down in Toronto, but this one is a bit different. In the past month Toronto Home Prices went up again. How? We’ll look at it in a second.
After analysing Toronto’s real estate market, we’ll discuss how Toronto’s housing market might act in the future ( predictions), and what outcomes home buyers and sellers might face. And then we’ll talk about whether this is a good time to buy or real estate during the COVID-19 Pandemic?
June 2020 began with the Ontario government easing the quarantine, and more businesses set to open, of course with practicing physical distancing! Many are still working from home and adapting to the new lifestyle though! Some others unfortunately still have to keep their businesses closed temporarily. This is a new experience for many, the physical distancing and #StayHome got a new meaning. Our generation will not forget this time! Maybe we’d reference those in the future as before pandemic and post pandemic!
But are we getting back to the Normal Market?
Toronto Home Prices are up 3% YoY and up 5% Month over Month!!!
It’s big news that Toronto Home prices went up 5% just in one month. Many buyers might panic now and many sellers might get happy. Before we start going deep into it let me explain, when in the report you see Sales are Down or Prices are up, none of them should be interpreted individually! Sometimes the number of home sales are up but prices go down! Sometimes it’s vice versa!
First let’s look at Toronto’s Housing Trend in the past four months, from before the Pandemic Starts.
June 2020 has started with a total of 4,606 resale transactions reported through TREB’s MLS in Toronto’s real estate market. That is a 54% INCREASE in the number of sales (Month over Month ) compared to the month before. Interestingly the number of sales wasn’t the only indicator that went up month over month. The average Toronto home price also went up by 5%, from $821,399 to $863,599. What that means is that Toronto’s market started to bounce back. As a Toronto real estate agent, me and my clients faced many Multiple offer situations in the Entry Level properties( $500K-$650K price range) in the past month, which some were in Downtown Toronto.
Now if we compare the Annual Trends, we’ll see that the average Toronto home price is still up from last year, by 3%. June 2020 has started with a total of 4,606 resale transactions recorded till the end of May with average sold price of $863599. That is a -53.7% Decrease in the number of sales BUT +3% Increase in Home Prices compared to last year similar time in Toronto’s real estate.
What that means is although the number of transactions have been drastically lower than the similar time last year, not only the prices haven’t dropped significantly, they started moving up. That’s Toronto’s average by the way, we’ll review different property types to see which ones had gains and which ones lost in the Coronavirus Pandemic market!
How Corona Virus (COVID19) affected Toronto’s real estate Market:
As we talked earlier, the number of real estate transactions fell by 53% but the average Toronto home price is up 3% year over year and 5% month over month! Market is moving, but slowly.
Slower real estate market doesn’t necessarily mean decrease in prices in the near future. As we’ve seen in the past month, other than Townhomes (which their prices stayed the same as last year) other home homes in GTA have seen increases in prices. Semi-detached homes were the leader of price appreciation here with 8.8% Increase YoY!
What will happen to the Toronto real estate market in the near future:
One thing that can be seen is that End users who need a home to live and or raise their families, started coming back to the market. Some investors are also out there looking for deals! On the other hand the number of listings has dropped interestingly by 53% from the same time last year. This is an interesting number sales are down 53% and New listings are down 53%.
Do you see the correlation here? Demand and Supply dropped by the same rate, meaning that the market most likely will keep moving with the same pace. If the supply and demand continue to move shoulder by shoulder, I don’t see any drastic increase or decrease in the prices in the market. So 53% less sales DOES NOT mean the real estate market is plunging because the supply has Shrinked the same amount!
That being said, once more confidence gets back to the market, the rebound would be very quick, as people will at some point realize that the real estate will go up again, so they will panic, this time not from the virus, but from missing out. The FOMO will get back to the market. And I predict that the Rebound would be much quicker than the plunge. However, I still think that even when the markets get back to normal, there would be ups and downs till we reach a balanced market (if not sellers market)!
Remember that the time that takes for a buyer to enter the market is faster than a seller prepares and puts a house on the market. So when those buyers who’re on the sidelines now, enter the market, the demand would be higher than the then inventory. And that’s what will cause multiple offers and drive the prices UP!
I strongly recommend that you set a strategy with your agent now, if you want to buy or sell any time soon!
General Supply and Demand levels in Toronto’s real estate market:
Active listings and Month of Inventory, are other indicators to keep an eye on. We started June 2020 with a total active listing of 11,448. This is drastically down from last year’s 20,017 listing’s in the same month. That being said, the Month of Inventory (MOI) Decreased to 2.48 Months of Inventory in all property classes in the Greater Toronto Area’s real estate market.
Just so you know, 2.48 MOI is considered a marginal balance and SLIGHTLY a sellers market! So buyers out there, beware of that! ( MOI 2.5 – 4.5 is roughly considered a balanced market, less than that is sellers market, over that is buyers market)
Toronto’s Condo Market ( Condo prices UP 6% YoY):
Toronto’s Condo Real Estate Agents finished the month with 1,002 condo apartment sales in the past month through the Toronto Real Estate Board MLS system.
Number of condo apartment sales in Toronto fell by approximately 60% compared to last year amid CoronaVirus (COVID-19). On the other hand, the average price of a condo apartment in Toronto went UP by 6% to $625,445 compared to the year before.
The Average condo apartment price in Toronto’s $625,445.
Toronto’s Detached Houses (Detached house prices are down 1% !) :
If you’ve been following our market analysis, you’d already know that we had predicted that CoronaVirus will affect the Detached Market in the next few months. Yet I think the lower end of Market ( Houses under $800K) and suburbs will not be affected significantly, or in some instances would get some high gains.
Please remember detached houses range from a few hundred to multi million dollar homes, so during the Pandemic, selling less multi million dollars homes, means the Average price would move down. But that does not mean the Cheaper Detached Homes ( under $1M Price Point ) decreased in value, yet they might have increased in value as well, but once we use average for the whole GTA, we need to consider all the factors. To know more about the Detached market in your neighbourhood you can reach out to us!
Another thing to consider is that more and more people will work from home, so there would be many people who don’t need to stay or keep living in Toronto’s core!
Toronto’s Realtors sold 2,285 detached houses through TREB this past month. The average price of a Detached house in Toronto’s $1,033,341. This is a 1% fall in Detached Home prices in Toronto.
Month of inventory is a good indicator that shows the OVERALL supply/demand situation in each area. It has been 2.8 MOI for detached homes in Toronto’s housing market. This means the Detached Market has been a Balanced leaning towards a Seller market! Again, this might not be the case in every neighbourhood and or every price range. Contact us for details about your neighbourhood or the market condition in any specific price range!
Semi-detached Prices are up 8.8% and Townhouse Prices are Down 0.2% YoY:
In the Semi-Detached homes market in Toronto we had a competitive market. Basically Semis were the property types that had very high gains in the past month in Toronto! One of the reasons is that they are usually in the lower end of the freehold market!
The average price of a Townhouse in Toronto has been $686,854 and the average price of a semi-detached house in Toronto has been $867,717! For more detailed info about these property classes and their respective markets, you can contact us!
Comments and Predictions for home sellers, June 2020:
Each micro market in Toronto has different behaviours from over all Toronto’s Real Estate Market. Our real estate market report is a complete overall market new report for the Greater Toronto Area. If you want to know about your specific neighbourhood, you still need to look at the stats in your own micro market. 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, if you are a seller, you might find the next few months better than the past couple of months. The market seems to continue to slowly grow and bounce back, based on what I see in the market. In many sectors of the Toronto real estate market, we can expect a balanced real estate market.
So if you need to sell, or you must sell to move, list your home for sale, but with all the health and safety precautions regarding COVID19 to protect yourself and the public. If you are thinking of Upsizing, this might be a good time for you to do the upsizing, for more info read “ Upgrading to a bigger home “.
Comments and forecasts for home buyers, June 2020:
I’ve dealt with many buyers who are fearful of their job security and are sitting on the sidelines. That takes out a number of the buyers from the market. So you’ll see less competition. If you are in an urgent need of moving or buying a place, and have enough financial security, this can be a good time for a buyer to hit the market.
Not with a predatory meaning, but this market might not stay more favourable to buyers than what it was 5 months ago. Remember even if the prices drop by 10% it would only be like last year. I don’t expect a huge plunge to come. But definitely there would be more opportunities for buyers in this market!
The Novel CoronaVirus ( COVID19) had huge impacts on Toronto’s real estate market, whether we like it or not. However it’s important to be ready for that and what will come next. We have been preparing for this and working on new strategies for our clients to guide them with their real estate needs amid these uncertain times ( with a look at the history, you can predict some of the outcomes).
Is it a good time to buy real estate during the Corona Virus Pandemic?
In general you might see a huge impact in Commercials and Office spaces. Since people will adapt to work from home, you might see that some corporations in the future give back a portion of their leased spaces. Thus more commercial real estate ( office or retail) listings would come to the market. That will affect the NOI and Cap rates. Thus I predict a drop in the value of the commercial properties. So in the next few months you might be able to start finding commercial real estate deals here and there.
For the residential properties however the story is different. Some parts of the market will be affected big by COVID-19, however there are other parts of the real estate market which will not be affected that much.
In residential the rebound would be very quick, as we saw a bit of it in the past month. There are many of the buyers right now on the sideline and are waiting to see a positive news of the market to jump back to the market. But rebound would be quick and thus you need to be so prepared to be able to use the current situation. Once the bottom is found, the prices would rebound rapidly! Why?
Because those who were waiting for the good days to come to buy a property, would flood the market. And then the listings will fly off the shelves and multiple offers begin because the demand would be higher than the supply. Result: rapid increase in prices! So you need to talk to your agents and brokers to be ready for that scenario before rushing out to do anything!
Stay healthy! And don’t forget the Physical Distancing!