It is important to keep up with the trends in the real estate market if you are looking to buy or sell a property. If you are looking for a good deal on the piece of property that you are interested in this information guide towards the right direction and course of action. The real estate market in Toronto did not get off to the kind of start that it normally does this summer. If we look the how the housing market has been over the years, we can see that there is usually a drop in activity during the months of July and August. The main reason for this is that most families are out on vacations during these summer months. Some of them also move to their cottages for these months. But as we all know 2020 is an exception because of the COVID-19 crisis. It is surprising to see that the real estate activity has not slowed down at all during the summer in fact, it is breaking real estate records of the previous years.
Data released by Toronto Regional Real Estate Board (TRREB) shows that the median price at which people are selling has risen to $951,404 in the month of August. If we compare it to what it was last year during the same time, this is an almost 21% increase. If we take a look at the total number of properties that have been sold, we can see a clear increase there as well. Compared to last year there is an almost 40% increase with 10,775 houses being sold. Considering that the summers are usually quite with little activity in the real estate market, these number are astonishing. And even more surprising is the fact that the country is still recovering from the effects of COVID-19.
As bizarre and unique as this trend might seem. If we try to understand it there is a possible explanation here. This increase in activity might be due to people trying to catch up on the time that they lost because of the pandemic. People who had no choice but to sit on the sidelines are now coming out to play in large numbers. This begs the question that what will the real estate market look like in the months to come and what will be the trends to look out for.
More buying power
It is no secret that borrowing is one the most crucial factors for the whole real estate industry. To support the economic and financial recovery from the effects of the pandemic the central bank has indicated that interest rates will remain at an all time low. The bank of Canada has even cut down rates by 150 points to 0.25 percent. If you don’t know what this means, then let us simplify it for you. This is excellent news for people who have the means to buy a house. Credit is cheaper than ever, and borrowing has never been this convenient before. Since the government and all the significant financial institutions of the country are making sure to do everything, they can to revitalize the housing market, this is the best time to buy.
With buying easier than ever and the government backing the real estate market it no surprise that business is booming. Houses are being sold in record numbers and the seller/buyer activity is seeing new heights. How long will this continue? Well, there are signs that show that the market might be about to tighten. There are only so many houses that can hit the market at a certain time and when these houses are sold at the speed that they are being sold right now. It creates a shortage of listings. To put it into simple terms. Houses are being sold faster than new ones are being listed. There is only one possible outcome from this, an increase in prices. It is an outcome that is inevitable considering the current situation and will lead to bully bids, blind auctions and bidding wars in the market.
Relief in the rental market
The effects of the pandemic have created situations that no one ever predicted or was ready for. The rental market in Toronto has softened significantly over the last few months. This is very good news for renters and a welcome one we think. The prices for rental units have dropped significantly. There are many reasons that have contributed to this development. The most important one being the rising problem of unemployment. Thousands of young adults lost their jobs during the early stages of the pandemic and have been forced to move out of the cities that they were living in to move back in with their families for isolation. This has created a shortage of demand for rental units and has been a major contributing factor the decrease in the rates of rentals. Other factors that are responsible for this trend include larger supply of rental units, a disproportionate number of units that have converted from short term to long term and an unprecedented increase in the number of evictions.
A new normal
The province is in stage three of it’s reopening process after the pandemic and that has a profound effect on the real estate market of Toronto. A new normal for the real estate market can been see in the city. The city adapted quickly and efficiently to restrictions that were imposed as a result of the pandemic and most of the activity that was being conducted at the height of COVID-19 was done online. The use of technology and digital tools has increased as a result of this. Even now when the market is officially open several agents are engaged in virtual deals with clients in order to catalyze the process of buying and selling. This is an interesting trend to look at because if this becomes the new norm where the world of real estate starts to function virtually it could bring about some interesting changes. Only time will tell.
The impact of immigration
The pandemic has caused a huge decline in the numbers of Canadian immigration. The numbers show that there has been a 44% decline in permanent residents arriving in Canada. Just 103,000 immigrants have been allowed into Canada this year. It is important to note here that immigrants have a very major impact on the real estate market of Toronto. This includes both renting and ownership. The decline in the number of immigrants will surely show its impact on the real estate market of Toronto in the coming months.
If we look at the market analysis of real estate in Toronto as of right now, then the average price at which property is being sold is $1 million. This indicates a 12.6% up tick from same time last year. This is a significant increase considering that the economy overall is still recovering from the effects of the pandemic. If we take a look at the trends in price of real estate, we can see that after the window of opportunity during the months of April and May there has been a steady incline in the prices. If we see the average prices for townhouses and condos, we can see a major increase there as well. With the average price of a one-bedroom townhouse being $614,000 and a studio apartment coming in at $415,000.
If we take a look at the overall number of listings then we can see that there are nearly 8800 new listings right now in Toronto with nearly 3300 homes being sold in the last month. The average number of days after which a listing is being sold is 16. And the selling to listing price ratio seems to be 102%.
Almost every sector of the country has been impacted by COVID-19. When the pandemic was at its worst most people were anticipating a major crash in the market, but surprisingly that has not been the case. The real estate market is actually doing really well in fact, it is overachieving if anything. If the recent momentum is anything to go by then it seems like it has no plans of stopping anytime soon.