Uncertainty still looms across the province, as we’re now several weeks into this unfolding pandemic. The following article provides an update regarding the housing market in March 2020 and is in addition to our previous article regarding the impact of COVID-19 on Toronto area real estate. Here is what our team at Dwelly is learning from the market during times like these.
Stats for March:
These March statistics issued by TRREB should be taken with a grain of salt since there is considerable variance between the first half and second half of March 2020. The state of emergency in Ontario and other government measures to contain the COVID-19 pandemic only really started to take place in the second half of March 2020 - that is when the Greater Toronto Area real estate market started to feel the consequences. Although the stats for March 2020 as a whole signal a healthy market, the real concerns arise when the latter half of the month is considered separately. Here is a comparison between the last two weeks of March 2020 vs the same period in 2019:
March 16-31, 2020 (Post-COVID-19) vs March 16-31, 2019:
- Sales: -15.9%
- New Listings: -18.4%
- Average selling price: $862,563 (+10.5%)
The implications of COVID-19 on the Toronto area real estate market can be easily distinguished by the data on sales, new listings and average selling price differences.
Frequently Asked Questions:
Is anyone selling during the COVID-19 outbreak and is it a good time to sell now?
While sellers should be strongly discouraged to list for the time being, new properties are still being listed on the market and that is for a number of reasons. For example, many sellers that were holding off listing their homes until the spring/summer market were motivated to list earlier in fear that the market conditions might worsen. Another reason for sellers listing their properties now would be personal situational circumstances surrounding the pandemic such as losing a job, losing investment funds, or having tenants that are not able to pay rent.
What are the sale prices & days on market looking like?
Listing Price to Sale Price were still over 100% in the majority of areas, which means sale prices have yet to reach much below asking prices. However, it should be noted that LP/SP ratio is sometimes exaggerated due to properties listed below market value to attract more offers for an offer night and ultimately selling over asking. Average days on market are still fairly low, which demonstrated that despite the economic uncertainty, the aptitude to buy is still there. Trends are certainly changing but prices, as of now, are not substantially slashed.
What are some trends this month?
- Offer nights have become rare. Most sellers no longer have the luxury of picking and choosing between multiple offers on an offer night, making the landscape less competitive for buyers.
- Offer conditions are starting to be the normal again. Receiving "clean" offers with no conditions will be a rare instance. In uncertain times like these, mortgage conditions is especially important since many lenders are taking extra precautions and many mortgages are being denied.
- With more restrictions on in-person showings and more individuals staying home, there is less competition for home buyers. Home buyers and investors who are willing to commit to a purchase based on pictures, floor plans, and virtual home tours will have an advantage.
- With less demand, sellers will be more flexible when it comes to offer details such as closing date, prices, etc., providing more room for negotiations.
What might we expect over the next few months?
- The longer this goes on, people without jobs aren’t going to be able to afford rent. The Toronto market consists primarily of condominium rental units owned by investors. That being said, when the rental income dries up, many investors may be forced to sell.
- Homeowners who have little accumulated savings to fall back on may not be able to make their mortgage payments if circumstances stay the same. While some lenders are offering relief in the form of payment postponement, at the end of the day these payments still needs to be paid. The impact of this might put pressure on home owners to sell.
- We expect to see overall slower activity in the real estate market due to mortgage rate volatility, unpredictability of circumstances, and continued social distancing measures during a state of emergency.
While circumstances are rapidly evolving, we will try our best to keep you informed regarding the state of the market. In the meantime, we wish you and your loved ones safety and perseverance during these challenging times.
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