A few weeks ago I let all my buyer clients know I think they should hold off searching proceed with caution on any purchase given all that was going on around the world with COVID-19 (at that time Coronavirus). Fast forward a few weeks we have had 2 state of emergency’s declared and life has changed for everyone quite drastically from mild isolation to total isolation in many cases. During this time I have been paying close attention to what is going on in the condo market so we can determine when is the best time to get back to the search.
It is still too early to know exactly the impact as I have noticed more conditional offers lately which are still pending but I went day by day looking at the market data since the beginning of February to see what has happened up until this point. Keep in mind that the sales data will be very low right now because there are pending transactions (Toronto condos sold conditionally) and because less people are going out for showings right now (many condo buyers have put their searches on hold) but sales are still happening likely with people that feel they have to buy right now.
As you can see from above the average prices have begun declining since about mid-late February. If you were looking to sell your condo, you likely already missed the peak of the spring market. New listings took a steep dive last week as we went from around 800 listings the week before to just 481 last week. This is probably the best thing for the market right now, everyone should just take this time off from life to stay their healthiest and minimize contact with the outside world. Hopefully this number continues to fall this week. Sales have also taken a drop but this could be due to some pending sales and because a lot of buyers have put their searches on hold due to the virus and emergency orders. The next few weeks will be really telling of the true impact as job loss numbers continue to climb steeply and as cases increase, but I believe the new cases we are seeing now is due to our mistakes from a few weeks ago where the general public didn’t really take this seriously. I am still hearing about groups meeting up in parks on weekends and hope this behaviour stops so that we can truly curve the spread of this terrible virus and get back to a functioning economy because the longer this lasts the more people will lose their lives and their jobs.
The positive from all this is the government has stepped up in a major way with subsidies for employers, enhanced EI coverage and lower interest rates. This should help keep anything seriously drastically from happening for quite some time.
Other Condo Market Concerns Related To COVID-19
Regardless I do still have some concerns about COVID-19 on the Toronto condo market. These are:
1) We could see a flood of former AirBnB units hitting the market due to the combination of rule changes and impact on travel
2) Job losses continue to climb impacting transactions that were in progress when buyers can no longer qualify for mortgages
3) Banks will raise interest rates (already happening) due to taking on more risk
4) COVID-19 will still be in our city for some time and businesses will keep their doors closed for a long time slowing down our economy even more
5) We haven’t likely felt the fallout from the oil industry price war taking place out west in Canada
6) Some tenant groups are planning to hold back rent on April 1st which could force some landlords into financial trouble
7) Immigration will slow down due to bans on travel from around the World
That being said, if you are a buyer there are going to be some fantastic buying opportunities in the short term so definitely send me a message to closely monitor what you are looking for.
RBC Predicts a 30% Drop Across Canada
RBC published an article today that they predict home sales will drop by 30% this year but expect the bounce back to be quick within a year. Keep in mind this prediction is made for Canada as a whole and I think we will see the biggest impacts in Western Canada but Toronto will likely see a drop in pricing too. I just think Toronto will recover the fastest so if you are a buyer it is important to keep a close eye on what is going on before making any quick decisions and I would be looking for good deals in the current market.
While I have mainly talked about buyers in this article I think there is still an opportunity for Seller’s out there who absolutely HAVE TO SELL. There are still buyers out there buying and I have had multiple properties that I have enquired about in the last week sell to bully offers (high over asking offers). Some buyers aren’t deterred in the slightest so you can still sell your house, you just need to make sure your agent knows how to sell a house online now more than ever. I will not even list a house right now unless it has a 3D Virtual Tour, amazing photos, floor plans or anything else that can limit the number of people to a property because the risks are too high for seller’s and health ALWAYS COMES FIRST. I have over 15 years of online marketing experience and prior to real estate had my own online marketing company so if you would like to set up a zoom call to see how I can get you the most money in this market, definitely reach out!
Take care, stay safe and stay healthy!