With no shortage of screen time these days, it’s no doubt you’ve been hit with a tsunami of headlines about how Toronto’s real estate market has taken a bit of a nosedive since the beginning of March and the onset of COVID-19. Yet homes continue to move, begging the question, really, how bad is it out there?
Here are some quick numbers from TREB; as of mid-April the volume of Toronto residential real estate transactions year over year is down -69% and the average selling price has slipped by -1.5%
Now that big dip is in inventory, as people make the decision to stay put, fewer houses are being listed. Despite volume being down, there is still a relatively good balance between supply and demand, otherwise, we would have seen a more significant drop in the average selling price as sellers who had no choice were forced to accept substantially lower offers than they normally would have.
Listings mirror sales and we’ve taken a historic plunge both in the sales volume and inventory. Let’s take a look at what’s causing this (apart from the obvious) decline in demand:
- Social distancing and the elimination of open houses is the prime culprit, although virtual tours have stepped up in a big way, it remains a poor replacement to the value of viewing a home in person.
When we do venture out with potential buyers, the safety of our buyers and sellers is paramount, gloves and masks are provided, surfaces are Purelled and viewings are quick.
- Job losses can be blamed for removing some buyers from the market, although data indicates that the majority of job losses were in lower wage industries that may not have been previously qualified buyers.
- The collapse of the equity market has eroded many would be buyers down payments, forcing them to sit things out until the markets (hopefully) rebound. Want a quick refresh on your purchasing power, check out our handy mortgage calculator.
- Stalled population growth, with no one coming or going, peoples relocation plans have been put on hold
- Evaporation of the tourism market and the reduction of the number of renters have left many would be investors with holes to fill. Real estate investors who were happily snapping up condo units last year to rent or Airbnb are now left holding the bag, and carrying cost, on units they may no longer be able to afford.
It is safe to say that you can expect a continued decline throughout the second quarter of this year as we continue to deal with closures, followed by a measured recovery leading into the fall market and strong price gains by year end.
If your job is secure and you’ve managed to protect your down payment cash, now may be the ideal time to take advantage of the low interest rates and reduced competition for a home upgrade.
Need help navigating the real estate market during the COVID-19 outbreak? We can help!