What will happen to Toronto’s Real Estate market moving forward during the COVID-19 Pandemic?
After analyzing Toronto’s real estate market, we’ll discuss how Toronto’s housing market might act in the future (predictions), and the situations home buyers and sellers may face. And then we’ll talk about whether it is a good time to buy or real estate during the COVID-19 Pandemic.
#Toronto A Different Type of Market.
GTA Home Prices are up 11.9% Year over Year and up 7.8% Month over Month!!!
It’s huge news that GTA Home prices went up 7.8% in just one month during a Pandemic. We think there are many contributing factors to propel this price growth - such as market timing due to relaxed lockdown restrictions, historically low-interest rates, FOMO, low inventory, and pent-up demand. Before we start delving into the numbers, let us explain, in our report when 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 are down or vice versa!
June 2020 ended with a total of 8,701 resale transactions reported through TRREB in the GTA real estate market which was a -1.4% decline Year over Year. However, something highly fascinating is that the sales number posted an 89% INCREASE in the number of sales, month over month, compared to May 2020. Sales weren’t the only indicator that went up month over month, as we mentioned the average GTA home price spiked by 7.8%, May to June from $863,599 to $930,869. Signalling that the pent-up demand proved tangible and that the market is absorbing the demand. Freehold properties, specifically detached properties are the most sought after in Toronto at this juncture.
How CoronaVirus (COVID19) affected Toronto’s Housing Market:
As we discussed above, the number of real estate transactions was marginally lower compared to last year, yet the average GTA home price is up 11.9% year over year and 7.8% month over month! That indicates the market has started to move with expedited pace. Whether we accept that or not, it seems the buyers and sellers have confidence and are actively seeking opportunities in the market regardless of the COVID-19 pandemic.
The true effects of COVID are yet to be seen on the job market in Toronto and those with buying power are proving they’ll seek out opportunity. Mortgage rates are still historically low, households are being assisted by the Government and lower case rates of COVID are bringing a sigh of relief or adding the confidence back into the market.
Suburban/Detached Urban areas are hot as people start to adapt to working from home and not needing to commute. For example, Vaughan has seen a Year over Year price uptick of 12%. Something we predicted in our previous blog posts and now 4 months later the trend continues in the suburbs of the GTA.
What will happen in the Toronto real estate market near term?
One thing for certain is that End users who need a home to live and or raise their families in are actively searching for detached homes and the $1M home market is on fire. Few investors might also be in the market looking for deals! Condos, on the other hand, may be a point of opportunity for renters or those looking to start their journey in the property ladder near term. With the level of standing inventory in the GTA shrinking (active listings are down -5.7%) there will be continued competition and more bidding wars, look for a resurgence in the condo come fall if you’re a seller in that segment. There’s so much to the story it’s important to reach out to us to discuss your micro-market.
That being said, as predicted, the rebound has been very swift, as people begin to realize that real estate is a healthy core asset you can enjoy. This may be stoking FOMO as buyers began to witness this rebound. We predict that this resurgence will be much quicker than the plunge. However, we still think that there will be peaks and valleys until we reach a balanced market.
Something to consider is the time it takes for a buyer to enter the market is faster than the time it takes for a seller to prepare and put their house up for sale. So, those buyers who may be on the sidelines still, will enter the market and cause another burst of demand outpacing inventory again. And this will maintain multiple offer scenarios in these case by case locales/market timings. Thus, buyers need always be prepared and their agents must watch for 20 plus day on market homes or find the lulls in those locales.
We strongly recommend that you set a strategy with your real estate agent now if you want to buy or sell any time soon!
General Supply and Demand levels in Toronto’s real estate market ( SELLER’S MARKET):
Active listings and Month of Inventory are other indicators to keep an eye on. We started July 2020 with a total active listing of 14,001. This is drastically down from last year’s 19,655 listings in the same month. That being said, the Month of Inventory (MOI) Decreased to 1.6 Months of Inventory in all property classes in the Greater Toronto Area’s real estate market.
Important to note, 1.6 MOI is considered a seller’s market!
Toronto’s Condo Market (Condo prices UP 7% YoY):
The GTA finished the month with 1,793 condo apartment sales representing a decrease by -16.3%, year over year. However, the average price of a condo apartment in the GTA was UP by 7% to $631,704 compared to the year before.
GTA Detached Houses (Detached house prices are up 10.8% !) :
Detached is back with a vengeance!
The GTA registered 2,285 detached transactions in June. The average price of a Detached house in the was $1,127,419 which is a 10.8% increase in Detached Home prices overall for the GTA.
Months of inventory is a good indicator that shows the OVERALL supply/demand situation in each area. It currently sits at 1.6 MOI for detached homes in Toronto’s housing market. This means the Detached Market is once again a Seller’s market! Yet, this might not be the case in every neighbourhood and or every price range. As mentioned anything near the $1M range and all the way to under $2M may experience hot multiple offer scenarios.
Semi-detached Prices are up 11.9% and Townhouse Prices are Down 9.8% YoY:
The Semi-Detached homes market in the GTA is experiencing a competitive market. Semi’s were the highest price gain segment in Toronto at 22% year over year. One of the reasons is that they are usually priced toward the lower end of the freehold market!
The average price of a Townhouse in the GTA was reported $729,045 and the average price of a semi-detached house in the GTA was reported at $929,138. For more detailed info about these property classes and their respective markets, please contact us!
Further Comments and Predictions for home sellers looking through July 2020:
Each micro-market in Toronto can experience different behaviour, but the general trend is the same in the city of Toronto. Hot Semi & Hot Detached markets. Condo and townhome sellers should look forward to a hot fall market if COVID restrictions continue to be lifted(bringing back city strength and amenity sentiment). If you want to know about your specific neighbourhood, you still need to look at the stats in your own micro-market.
In general, if you are a seller, you will find the next few months more prosperous than the major lockdown months. And if you need to sell, or you must sell to move, do it with all the health and safety precautions regarding COVID19.
Is it a good time to buy? More Comments for home buyers looking through July 2020:
If you’re looking to move, you should brace yourself for some competition and look for creative ways to find stale listings/overpriced listings. It’s imperative to have your financing in order before entering the market right now, as you may face increased competition ( depending on the property class and location)! If you are looking for a detached, you’ll face more competition than a condo apartment! Getting a consultation or help from a Toronto real estate agent would help you to overcome many of those obstacles easier. It’s important, still, in times of hot markets to find the right home within budget, secure a low rate and hold onto that property for many years to come. Remember that August is historically the lowest price month and one of the best in terms of opportunities for buyers. Please take advantage of this if this is the case this year – Call us to study your local micro-market for opportunity.
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 what will come next in your Real Estate story. 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 future outcomes).
Stay healthy! And don’t forget the Physical Distancing!
- Mark and Ari