Toronto’s real estate market is charting a Phoenix-like resurgence, with the economy slowly pushing aside the curtains. Businesses and services are resuming in bits-and-pieces after months of lockdown-induced-uncertainty had put the business community on tenterhooks.
Canada is still in the middle of the pandemic. But the country has been successful in avoiding an explosive outbreak, something that has given the government a boost to unshackle the economy. Though strict pandemic protocols will be in force for some time, the real estate community in Toronto is relieved and upbeat for a great rebound.
After witnessing a harrowing March and April, where real estate sales tanked to record lows, May and June sales provided some succor to Toronto’s real estate market. According to Toronto Regional Real Estate Board (TRREB) May 2020 sales were up by 55.2% over April sales and June followed a similar sales graph.
Covid-19 has seriously impacted home sales and listings, but demand for homes remained the same suggesting pent-up demand for homeownership. Homebuyers had hit the pause button for two months but are upbeat about fulfilling their dream of homeownership as the economy has reopened.
This unexpected demand has pushed home prices in Toronto by 3% in May. The average condo price in May rose 11% touching $674,621 whereas freehold properties soared 9% to $1.3 million. This appreciation can be attributed to a decrease in supply with new listings down by 61% for freehold properties and 38% in condos for May on a year-on-year basis.
According to TREBB, as the market recovers, consumer confidence will peak up and script a brilliant turnaround for the real estate market as customers will take advantage of low borrowing costs to buy a home. However, policymakers will have to look into the dearth of diverse housing supply in Toronto and ensure the affordability of homes for people from all walks of life.
To do this, the Federal Government may adjust the mortgage stress test to allow flexibility for buyers and give permits for 30-year amortizations for mortgage insurances. Flexible home-buying plans, increasing withdrawal limits are some other options that the feds may think of in the coming weeks.
However, the real estate market in Toronto is still a sellers’ market as bidding wars have started in highly-coveted places and in areas where properties are reasonably priced. With borrowing costs still at its lowest, homebuyers want to cash it on this opportunity, lest the mortgage rates rise with the economy having reopened.
So, why is Toronto’s real estate market getting competitive all of a sudden?
The desire to own and live in one’s own home has goaded homebuyers to stave off any latent fears and make a dash towards properties in and around Toronto. The addition of 45,742 persons to the City of Toronto last year also contributed to this sudden spike in demand for properties.
So, even if some of the existing Torontonians stay on the side-lines during the summer, it won’t affect the sales as many people are waiting to enter the market. The competitiveness will go the whole summer and may extend beyond that.
Toronto is a world-class city and people who have long-term plans on the horizon of settling here will look for homes seriously. Though first-time buyers will have to wait for some time for prices to slide down a little.
All said, one thing is clear that the current position of the Toronto market is nowhere close to that of previous years. The reason is obvious though. But the way things are changing by the week in the real estate market, nobody expected that Toronto real estate will fare so well even when the pandemic is still raging on.