The Impact of COVID-19 on the Toronto Real Estate Market
COVID-19 has made a huge impact on virtually every life on earth, from tragic health risks to international debates and economic consequences. We’ve all been touched in some way by the pandemic, and the Toronto real estate market is certainly no exception. This week we want to take a look at the industry and market response to the coronavirus.
It is late July of 2020 at time of writing, and most of the world is slowly easing out of quarantine to live again, albeit with heavy safety precautions in the form of social distancing and mandatory masks. By now we all know the story of the coronavirus’ beginnings in Wuhan, China, and its quick spread around the world. Canada’s patient zero arrived on January 22. While he was checked for symptoms at the airport, he displayed none, but then was hospitalized the next day. Cases coming into February were mostly travel-related. By March, the virus was widespread enough to be transmitted locally, and this is when things for many Canadians got serious.
As the country began its quarantine lockdown, real estate was quickly named an essential service by the government. Brokerages adjusted hours, and offices to operate safety and continue providing service to people needing to buy, sell and lease.
On March 20th, TRREB released a list of best practices to follow for open houses and showings. Open houses were discouraged, or suggested to be highly restrictive with the number of people in the property at once.
Real estate brokerages took strides to protect their clients by having agents showing their properties review and sign disclaimer forms. Showings were to be conducted with social distancing measures observed, masks and gloves on, and no touching of anything in the property.
There was quickly an uptick in real estate listings that utilized professional photography, videography, and virtual tours. While extra marketing costs extra money, these polished and comprehensive digital representations of properties allowed prospective buyers to get a much better idea of the space. They aided in narrowing choices and saved people from needing to go on as many potentially risky outings.
Toronto Realtors have worked tirelessly to keep the real estate industry moving through thick and thin in the safest way possible, and we thank all the agents who have been out in the field, operating safely and securely!
Despite best efforts, the financial angle of the Toronto real estate market was, of course, impacted by COVID-19.
Before the pandemic, Toronto was experiencing sky high year-over-year pricing gains. In January and February, average sale prices were approximately 15% higher than the same months in 2019. These numbers took a dip for April and May, lining up with lockdown dates, though the prices did manage to stay just above the average sale prices of 2019. Buyers felt more comfortable as June came around, with a return to form of 11.9% year over year price interest as compared to June 2019.
Along with prices, the number of transactions were also impacted (to the surprise of no one.) Total transactions and new listings both dropped dramatically in April, some going lower than 50% of the amount last year. The numbers also stabilized in June.
For more detailed numbers, see the graphics below, with statistics taken from TRREB monthly market reports.
One thing that has helped Toronto bounce back from the pandemic has been the response of financial institutions. The Bank of Canada cut interest rates three times in March, and while other venues were slower to follow, here in June we now have the lowest rate in Canadian history. A five-year mortgage hovering at around 2% makes for a great window of opportunity to invest in a new home.
We can also thank our government’s swift action in protecting the population and therefore protecting the economy as well. Social supports such as CERB and wage subsidies for businesses have kept Canadians stable enough to be able to afford new purchases.
While we’re not completely out of the woods, restrictions are slowly being lifted and life tentatively returns to normal. The Toronto real estate market is incredibly resilient and is already bouncing back. If you’re looking to buy or sell, now is a great time. Realtors like those at Envision Realty are well-equipped for showings in the current atmosphere and will work hard to get you the best deal.
We specialize in Leslieville real estate and more, from downtown to midtown Toronto to Etobicoke. Broker of Record Salar Taba has been following the market closely and working all through the pandemic and is available to help you discuss your options.