2020 05 May, Toronto Real Estate Market REALITY of what is Happening

Toronto Real Estate Market COVID-19! Prices ARE the same as last year! WHY?! (May 2020)

The REAL effect of CoronaVirus on Toronto’s real estate market is still unfolding! You might see all kinds of news headlines about Toronto’s real estate market in the days to come, but which one is accurate? What will happen to the market after the COVID-19 Pandemic?

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. How? We’ll discuss that in this article.

Next we’ll discuss how Toronto’s real estate 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 real estate?

There has been a lot that happened in the past month in Toronto’s real estate market during COVID19 pandemic. May 2020 began with many people in quarantine, and practicing physical distancing! Many had to start working from home and adapt to the new lifestyle! Some others unfortunately had to close their businesses 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!

Toronto Real Estate Market Overview, Number of Sales Down -67% and Average Home Prices FLAT YoY:

This is important to know that the number of sales and prices MUST be interpreted together in order to prevent confusion for the average consumer! When you in the report you see Sales are Down or  Prices are up, none of them should be interpreted individually! Sometimes sales are up but prices go down! Sometimes it’s vice versa!

May 2020 has started with a total of 2,975 resale transactions reported through TREB’s MLS in Toronto’s real estate market. That is a 67% decrease in the number of sales compared to last year in similar time in Toronto’s real estate.

Meanwhile the average home price in the Greater Toronto Area (GTA) has been $821,392 which is a 0.1% price increase Year over Year in Toronto’s housing market! What that means is although the number of transactions have been drastically lower than the similar time last year, yet the prices haven’t dropped significantly. 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 CoronaVirus (COVID19) affected Toronto’s real estate Market:

We’ll review the major sectors of Toronto’s real estate market in this article. Number of real estate transactions fell by 67% but the average Toronto home price is still the same as what it was last year at the same time! Market is moving slower, but:

Slower real estate market doesn’t necessarily mean decrease in prices. As we’ve seen in the past month, Townhomes and Semi-Detached homes in some parts of the GTA had seen increases in prices, whereas Condos and Detached properties had seen a decrease in prices. On the other hand, other areas such as Hamilton, have seen Multiple offers here and there, in the past months!

What will happen to the markets when the CoronaVirus (COVID-19) gets controlled:

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 would start rising again.

After analysing many indicators in the market, I think in the next few months the real estate market in Toronto and equity markets will experience a plunge. I predict a few more months to come with a slower real estate Market in Toronto, but after this pandemic gets closer to its end, I predict a very quick rebound.

That being said, 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.

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, for after this pandemic gets under control.

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 May 2020 with a total active listing of 10,561 which is drastically down from last year’s 18,037 listing’s in the same month. That being said, the Month of Inventory (MOI) increased to 3.5 Months of Inventory in all property classes in the Greater Toronto Area’s real estate market.

Just so you know, 3.5 MOI is considered a balanced market!

Toronto’s Condo Market ( Condo prices down Over 1.7% YoY):

Toronto’s Condo Real Estate Agents finished the month with 667 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 71% compared to last year amid CoronaVirus (COVID-19). On the other hand, the average price of a condo apartment in Toronto only fell by 1.7% to $578,283 compared to the year before.

The Average condo apartment price in Toronto’s $578283, which is a 1.7% decrease in prices, YoY!

Toronto’s Detached Houses (Detached house prices are down 3.5% !) :

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 $700K) and suburbs will not plunge significantly, or in some instances would get some gains.

Particularly I’m talking about suburbs, as me and my business partner Mark were discussing this. His reasoning was 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! Which I agree with, and I think suburbs and the lower end of the detached market will not plunge significantly, and or some of those markets would get some gains ( very lower end of the market)!

Toronto’s Realtors sold 1,412 detached houses through TREB this past month. The average price of a Detached house in Toronto’s $983,630. This is a 3.5% fall in Detached Home prices in Toronto.

The number of sales also decreased to a total of 1,412 sales, with the number of active listings standing on 6,127!

Month of inventory is a good indicator that shows the OVERALL supply/demand situation in each area. It has been 4.3 MOI for detached homes in Toronto’s housing market. This means the Detached Market has been a Balanced leaning towards a buyers 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 are up 7% and Townhouses are up 3.8% :

In the Townhouse and Semi-Detached homes market in Toronto we had a competitive market. Basically Townhomes and Semis were the property types that had 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 $681,393 and the average price of a semi-detached house in Toronto has been $865,971! For more detailed info about these property classes and their respective markets, you can contact us!

Comments and Predictions for home sellers, May 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 update 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 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, if you are a seller, you might find the next few months difficult. As the market will continue to slow down based on what I see in the market. In many sectors of the Toronto real estate market, there are going to be price reductions and price drops.

So if you need to sell, or better put it that way, if you MUST sell, list your home for sale, but with all the health and safety precautions regarding COVID19 to protect yourself and the public.

Read More : Top 10 Mistakes to avoid when selling your home

Comments and forecasts for home buyers, May 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 is more favourable to buyers than what it was a couple months ago. Remember if the prices drop by 10% it would only be like last year. I don’t expect a huge plunge. But definitely there would be more opportunities for buyers in this market!

Conclusion:

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 Coronavirus 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 COVID19, 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. 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!