TORONTO, MARCH 4, 2020 – In line with the forecast contained in the Toronto Regional Real Estate Board’s recently released Market Year in Review and Outlook Report, TRREB President Michael Collins announced a very strong year-over-year sales and price growth in February 2020.
A tale of two markets. The first two weeks of March were very strong setting up for what was looking like a strong spring market. Enter, The Corona Virus. Due to restrictions placed on the industry, the market has slowed dramatically and likely won‘t normalize until the pandemic subsides.
The number of properties sold has decreased significantly due to the ongoing pandemic and its associated restrictions. That said, the inventory is quite low and prices remain reasonably stable. (Slight decrease)
Having moved through month one of the Corona Virus and its associated restrictions, we felt that now would be a good time to reach out and let you know what’s been going on and what will continue to go on until these restrictions are lifted.
While real estate has been deemed an essential service, it isn’t business as usual. As per direction from the Ontario Real Estate Association, face to face business can’t occur. This means that properties can only be seen virtually through digitized presentations. It also means that if a transaction were to occur, it would have to be done sight unseen with a condition of physical inspection at some future date. While not ideal, it creates opportunity for those who are willing to delve into this new and hopefully, short lived reality as one would expect that those who have their properties on the market are doing so because they have to.
As for the market itself.... Year over year sales have predictably plummeted. The number of sales for a comparable period prior to the virus are down 75%. There has also been a slight decrease in pricing. The million dollar question is how this plays out longer term? Will there be pent up demand once this is over or will the economy be so badly damaged that the demand will wane? It will also depend on how long it takes to get the pandemic under control. Economists have three opinions on the recovery... A “V”, “U” and “L”. A “V” shaped recovery would suggest that we hit bottom and immediately recover once the virus is eradicated and/or contained. The “U” shaped recovery suggests that rather than bouncing back immediately, we spend some time at the bottom as the economy re builds. An “L” shaped recovery is somewhat more problematic in that it suggests a much longer period in economic uncertainty with a potential recovery at some date well into the future. Few have suggested an “L” shaped recovery but many are moving off their initial “V” to embrace a “U” shaped recovery. How does this affect real estate prices? In our opinion, it’s too early to say. Short term interest rates have been coming down while longer term rates have been going up as banks are pricing in some risk. Central banks are printing money and engaging in quantitative easing which is intended to support an underperforming economy. This tends to be inflationary and supportive of things like real estate.
We continue to work as best we can given the environment. Most pre construction launches are being pushed to the fall but are expected to go ahead as planned. Anyone who has bought and is awaiting occupancy can expect those dates to get pushed back as most construction projects have been directed to cease work temporarily.
Please reach out if you have any real estate questions on either pre construction or re sale.
Erika & Mark
firstname.lastname@example.org 416 452 4967
email@example.com 416 568 8577
While the year over year numbers are eye opening, the market remains surprisingly robust. We are recovering from the pandemic lows with an increase in both the number of transactions and pricing. Clarity is coming back to the industry as we remove the restrictions that were in place to prevent the spread of the virus.
The MLS® Home Price Index was up by 8.2 per cent year-over-year. The average selling price for all home types combined was $930,869 – up by 11.9 per cent compared to June 2019. The actual and seasonally-adjusted selling price was also up substantially compared to May 2020, by 7.8 per cent and 9.8 per cent respectively.