Back in March, when we the pandemic hit, everyone wondered what will happen to the real estate market in Toronto? Will it go down in flames? Who will lose the most? Questions like those were quite common, and there was no lack of doom scenarios.
However, the Toronto real estate market turned out to be quite resilient. It did get hit pretty badly, but after the initial shock, it immediately set itself on the fast track of recovery.
During the summer, as reported by both TRRERB and real estate agencies in Toronto such as Condo Mapper, the real estate market has been on the fast track of recovery. Things seem to be well on route to pre-coronavirus times.
But same as every other summer, summer 2020 had to end and make way for fall 2020.
Once again, people start asking the same old question, what will happen to the real estate market this fall? What are the current trends? Can we expect to ride the summer trends during fall 2020, or we got something else waiting to happen?
To ease the mind of everyone, we have made a list of some of the most notable trends this fall. As always, the trends presented here are based on data accumulated by TRREB and real estate agencies that are in the trenches, grinding night and day to earn a buck during these troublesome times.
#1 Year-by-Year Home Sales up by 14%
The average selling home price in September was $960,772. That’s 14% more than September 2019. Considering that we got the pandemic hanging on our shoulders, this is very impressive. Much of this growth is attributed to the low-rise market segments, whereas the condo market segment experienced slower growth.
The fear of another lockdown drives up the housing segment of the real estate market in GTA. The spring lockdowns were a game-changer for people living in condos. The idea of enduring another lockdown in an apartment scares the heck of many condo owners. Many folks had already replaced their condos with houses, and many more are on the market for a new house while trying to ditch their apartment.
#2 Bank of Canada Slashes Interest Rates
Every financial institution and the federal government are going the extra mile to help the national housing market. As a result, interest rates are at historical lows. That is the best possible news for potential homebuyers. And many homebuyers did make the most of that during August and September, hence the high flying housing sector.
What’s certain is that the low-interest rates will persist throughout 2020 and beyond. Consequently, many more people will be drawn by the opportunity to get such a cheap loan.
#3 Tighter Housing Market
Again, much revolved around the housing market that is on fire. Current data suggests that more homes are being sold than new listings are added to the market. We saw the first signs in August, the trend became more obvious in September, and it might well persist during the remaining months of fall 2020.
If that’s the case, and things look like heading in that direction, an uptick in home prices is evident. What remains the biggest mystery is how high the house prices will go and which segment of the housing market will experience the most increase. The demand for detached and semi-detached houses is the prime suspect in this case.
#4 The Rental Market is Slowing Down
Rental prices are going down, and this is a trend that has been going on throughout the entire summer. There are several reasons why the rental market is slowing down.
One of the main reasons why rental prices went down, are going down, and will go further down in the coming months, is the high supply of new units. The fact that for four months, there was no migration played a huge hand in this matter.
According to several reports from several agencies, the average rents decreased for much as 14% in many neighborhoods.
#5 Canadian Economy Bouncing Back
Every key metric shows that the Canadian economy is rebounding. The unemployment rate is decreasing, the gross domestic product is rising, and business confidence is increasing since mid-spring. Another thing that the metrics show is that Toronto is at the forefront of the comeback.
Then there are the people of Toronto that have accepted the new normal and give their best to make the most of the situation we are all in collectively.
If the economy keeps pushing ahead in the same manner as in the previous months, the real estate market will only benefit from that. Industry experts believe that both the residential and commercial sectors will benefit equally from the growing economy.
A strong economy, favorable interest rates, unemployment rate going down, determined and disciplined citizens, all that contributes to a real estate market bound for expansion. Once the migration starts to increase at a higher pace, it will act as rocket fuel to the real estate market.
The promising vaccines bound to be available by the end of the year also influence the already growing optimism among the citizens that soon we will be living as before the coronavirus.
But while we are summarizing the positive signs, we also need to mention another moment – the possibility of a massive second wave of new infections before the introduction of a vaccine.
From the look of things, the second wave of infections is the only thing that can slow down the real estate market in Toronto. It is not likely that we will need to endure another lockdown as we did in the early days of the pandemic, but a new surge of infections will deter many people from investing in real estate.
Hopefully, everyone will do their part to prevent any massive outbreak, and business can go under the “new normal” until a coronavirus vaccine is widely available.