In a short period of time the COVID-19 pandemic crashed the global economy and for many dramatically altered lives. When we entered 2020 no one could have ever imagined a virus outbreak that would close down the global economy and disrupt how everyone across the world lives their lives.
However, the Canadian red-hot real estate market appears to have bounced back really quickly. Buyers and owners have been waiting to see if COVID-19 will result in a drop in house and condominium prices. It is difficult to project the long term impact but recent activity indicates that the housing market in and around the Greater Toronto Area is far from crashing.
April COVID-19 Impact
In April the GTA real estate market literally came to a standstill due to the COVID fallout and the social distancing mandates that were implemented. Once May rolled around we saw the unexpected rebound of the real estate market. In the month of May, we started seeing more activity than in April. Sales increased by 55% in comparison to the month of April 2020 but were 53.7% below the sales volumes for the same period of May 2019. However, given the pent up demand and the low inventory we saw an average price increased by 3% in the month of May compared to May 2019.
For the most part, we haven’t seen price drops due to the COVID-19 crisis and the impact it has had on the economy. While sale transactions have dropped prices have for the most part not dropped.
Why Have We Not Seen Real Estate Prices Crash?
The GTA real estate market continues to be Canada’s hottest market but why? COVID-19 has resulted in many people being out of work, and businesses have had to shut down. However, listing activity was dramatically down and there continues to be pent up demand by buyers. So buyers greatly outpace listings resulting in increased prices despite the shift in our economic situation.
Those buyers that have continued to work and in many instances work from home did not have to dip into their savings to stay afloat and are in a good position to take advance of current lower mortgage rates. Reduced mortgage interest rates are allowing buyers to borrow larger mortgages at a lower cost over time.
Over the past two months, we have heard some very pessimistic outlooks for the real estate market in the GTA. However, the reality is actually looking is a lot better than was forecasted earlier in the pandemic. Although uncertainty still exists about the future impact, the real estate activity that we are seeing suggests that it is not all doom. The real estate fundamentals of the real estate market have remained the same as they were before COVID-19 - huge demand and a short supply we can expect the likelihood that GTA real estate prices will not crash.
June Summary of the Real Estate Market Activity
In June we saw a dramatic rebound of the real estate market in the Greater Toronto Area market in comparison to the month of May 2020. In June sales activity was up 89% compared to May 2020 and only down 1.4% compared to June of 2019.
New listings in June were up 2.1% year over year. However, active listings at the end of June were down 28.8% compared to June 2019. Growth in new listings will have to outstrip growth in sales for a number of months before active listing reaches 2019 levels.
The average sale price in June 2020 for all home types was $930.869 which is up 11.9% compared to June 2019. The detached and semi-detached homes experienced the highest average annual price growth in the City of Toronto at 14.3% and 22%. We are also starting to see a resurgence of the higher-end market segments.
Although no one can predict the future the data indicates that the housing market is bouncing back much quicker than expected.
If you have any real estate questions or are thinking of making a move reach out.