COVID-19 & Toronto Real Estate Market
Keep in mind the situation regarding COVID-19 is changing on a day-to-day basis. This article is a breakdown of the current COVID-19 situation (as of March 25th, 2020) and how it relates to the Toronto real estate market from the perspective of a local Toronto Realtor.
We're entering the ordinarily busy spring market for Toronto real estate, but as it stands now, everything is at a standstill. Sellers are reluctant to let any potential buyers into their homes and buyers are self-isolating, not leaving the house. Across the GTA, the number of listings is down, and the amount of demand is down - way down. I have personally experienced plenty of listings in Toronto cancelled due to the COVID-19 pandemic.
Less Activity
BrokerBay, the back-end system we use at RE/MAX to schedule showings and register offers, reported the number of showings booked went down approximately 50% compared to the week before. BrokerBay is also used in Toronto and GTA by most of the other large brokerages, like Royal LePage, Century 21, Keller Williams and more. BrokerBay also reported the number of registered offers is down by about 50%.
Social distancing affecting buyers and sellers
With everyone being socially responsible and adhering to social distancing, buyers are putting off viewing properties and buying plans entirely. Sellers are unwilling to have any prospective buyers walking through their homes. This is awesome for slowing down the spread of COVID-19, but it will slow down Toronto's real estate market dramatically. The cost is well worth it, in my opinion.
There are still plenty of residents in Toronto that need to either buy a house and sell their home in the coming months. What does this mean for people in this situation?
Doug Ford has deemed real estate as one of the essential businesses still allowed to operate, so Realtors are allowed to help these clients. Although with as little physical interactions as possible.
Solutions for buyers:
I am currently working with a buyer right now. We are carefully vetting each property before moving forward and scheduling virtual showings. I go to the property on my own, wearing gloves. Through video chat, I walk through the entire property with the client. If the client decides to put an offer on a listing, it will be conditional on a future visit and waiving the condition.
Solutions for sellers:
The ideal situation right now is the property is vacant. If that's not possible, I recommend as much virtual marketing as possible. Include a link to a property website with as many photos and videos as possible. Video walkthroughs & 3D tours from companies like Matterport will help buyers inspect your property without physically being there. Using these tools will help cut down the number of unnecessary showings.
Affordability
The Bank of Canada has recently cut interest rates to help stimulate the market (here's a link to a past article about this). This made for a lot of good headlines, but the Bank of Canada has also put on hold the coming changes for the stress test.
If you saw the market update for January and February of 2020, you'll also see the prices for all property types have increased dramatically year-over-year. Especially the condo and detached market (link here to January 2020 & February 2020).
So far, we haven't seen any noticeable changes to real estate prices in Toronto. I do expect to start seeing the effects of COVID-19 on the real estate prices in the next several weeks. The market watch update will be released in just under two weeks from now and will be very interesting.
The Stock Market
Stock markets around the world crashed - fast and hard. "History's largest point plunge for the Dow Jones Industrial Average (DJIA)."
With buyers holding their funds in stocks & ETF's, which would be going towards a downpayment on a property purchase, it is now worth considerably less compared to just two weeks ago. This, combined with a looming recession, will put any purchasing plans on hold until the market recovers for many buyers.
What we can do about it
The best thing we can all do now is practice good hygiene and social-distancing. I know the near future may be looking bleak to some of you, but we need to stay calm, safe and don't panic. We, as a society, need to work together to get through this situation together.
Looking forward
The short answer is, I don't know. At this point, it seems like it can go either way. Right now, the situation is bad - the real question is, how bad will it get and how long will it last. The answer no one knows. One certain thing is that it won't last forever - we will get through this. There is light at the end of the tunnel.
If you have any questions at all, please reach out to me - I’m always happy to help.
