The Goods - COVID and the Toronto Real Estate Market
One thing that everyone can agree on is that the global pandemic has ushered in uncertain times across many sectors. From the way Canadians do everyday tasks like, buying groceries to where and how we invest our hard earned money, our daily lives have intrinsically changed due to COVID-19. The Toronto Real Estate market is no exception to the effects of this global virus.
In this piece we will analyze some of the key developments in the current Toronto Real Estate Market and what trends to watch out for as we move into the New Year.
What is happening in the market?
As the abrupt lockdown in March 2020 of this year has had most people confined to their homes indefinitely, the Real Estate market tentatively waited to see how this would affect people’s buying and selling patterns. Although the Toronto Real Estate Market is not impervious to COVID-19, the current market is showing signs of growth and even stability during these turbulent times.
Primary Effects of COVID-19
There are two primary impacts that COVID-19 has had on the Toronto real estate market:
1. A flooding of the market with condos that were purchased for investment purposes
2. Single family homes, especially in the suburbs experiencing a surge in sales and price
Condo Living No More
As a society we are all being encouraged to stay home, maintain social distance, keep within our exclusive bubbles, wear a mask and wash our hands frequently; this has resulted in a high demand for more livable space to spend quarantine and help make these restrictions a little more bearable.
The three primary drivers for the increased demand of space are:
1. Working from home
2. Desire for privacy, i.e. you don’t want to ride an elevator with your neighbour anymore
3. Desire for private outdoor spaces
The City of Toronto has introduced some legislative changes that made short term rentals in secondary properties (ie. AirBnB) no longer possible, which has compounded the above drivers. Since travel has ceased, online learning has taken the place of in person classes, and major lay offs have occurred across many job sectors, the traditional target for tenants, being tourists, students, and young professionals, has all but vanished. This has resulted in investors offloading condos and investments properties like hot potatoes and saturating the market.
The once booming condo market has certainly slowed, however, it has not completely flat-lined, as we are still seeing some growth in comparison to last year. Buyer’s who could not afford to buy in 2019, are now taking advantage of the relatively stable market.
I’ll take a House Please
While the condo market might be flat, the single family home market is a hot commodity! The why is in the above three drivers for more space. Working from home, requires an at home office. Privacy, means having a sanctuary for yourself (at home gym, meditation room) and a fence between you and your friendly neighbour. A more extensive backyard results in socializing more with family and friends for distanced visits.
The need to commute is a thing of the past, as companies realize that their employees can effectively work from home. The downtown professionals are dispersing outwards into the suburbs, causing the single family home market in the GTA to surge.
The Toronto Real Estate Board says that October 2020 saw a 25.1 percent increase in home sales from October 2019. This increase in sales is matched by a 14.8 percent increase in the price of detached homes to just over $1.2 million.
What does it all Mean?
While a second wave and lockdown will bring uncertainty to different sectors, we can forecast that the desire for single family homes is not going anywhere. COVID-19 has forced us to social distance, but we do not have to be confined, we can live in a home which grants us the space and freedom we desire during this pandemic and onward.