Real Estate Market continues to soar amidst COVID-19 pandemic

3 years 9 months ago #47 by KCA Admin
Real Estate Market continues to soar amidst COVID-19 pandemic, what has been the driving force behind the record setting demand?

At the beginning of 2020 the housing market in the GTA was set to be a record-breaking year with demand and home prices soaring in the months of January and February. The real estate market was hot in winter, indicating that the spring market will be extremely busy. Then COVID-19 hit and it hit hard. The Government of Ontario shut down the economy Mid March, businesses were forced to shut down, Offices were closed and life as we know it turned upside down!

As Canadian families adjusted to a new reality, homes were transformed to offices, daycares, schools, places of worship for months that followed. The lockdown caused more families to realize that they need more space indoors and outdoors as well. Access to a backyard where one could enjoy the outdoors safely and without restrictions became a must have.

In the GTA, the result of this shutdown was felt from the second half of March through to April with the number of homes sales dropping by 66.2% while average prices fell by 11.8% compared to just a month before. Home sellers concerned about the pandemic and health risks pulled out of the market resulting in a 66.1% drop in new listings compared to April 2019.

The drop in listings caused a shortage in inventory, an issue that has been persistent before the pandemic. During the shutdown, Real Estate was declared as one of the essential services and new COVID-19 safety protocols were implemented quickly by Realtors® using technology to ensure that homes were viewed safely and to complete required real estate contracts. In May, more buyers started shopping for homes resulting in 53.1% more transactions and a jump in average prices by 4.6% compared to just a month before. Since then, the GTA market has been thriving with the numbers of listings and average prices increasing consecutively in the months that followed.

Below is the breakdown of the year over year comparison of Sales and Average prices in the GTA for the month of August 2020 provided by the Toronto Regional Real Estate Board (TRREB)

Because of the shift in work life dynamic, and working from home becoming the new norm, Canadian families started looking for bigger homes that would have more office space and yards. These were the homes that would give them the work life balance that many now realized they needed because of staying indoors during the COVID-19 lockdown.

This has resulted to two main key factors:

1.An increase in demand for detached, semi-detached houses and townhouses. These home types were the drivers of sales growth in the spring/summer markets. Fierce competition among buyers lead to robust increase in annual rates of price growth.

2.With working from home increasingly becoming the new way of life, more families are no longer attached to their neighbourhood.

Realtors® in cottage country report increased activities attributed to the above factors. Taking the commute out of the equation, all you need is a great internet connection and you can work from anywhere!

With this new norm, the possibilities are endless. Affordability and an enhanced quality of life are the key motivators for Canadians to buy homes. Considering that the price of a condominium in the GTA, fetches a detached home with a large backyard in the subs, it makes a lot of sense for many to remove commuting to work from their daily activities. I have personally helped many clients with such a move this year addressing both their need for affordability and enhanced quality of life.

It seems what is happening in the GTA is reflected across the nation. There is a surge in demand for housing right across the country as well. According to the Chairman of CREA, Costa Poulopoulos, record setting trends have been reported nationwide.

In conclusion, what does this mean for the buyer and seller? What the COVID-19 lockdown has clarified for many buyers and sellers is what they want in terms of their housing preferences. And this clarity may explain the fierce competition and the speed with which transactions are being concluded. Additionally, reports from various housing market research reveal that close to a 1/3 of first time home buyers search preferences have shifted away from cities to suburbs or rural areas while 25% of prospective buyers have similarly shifted their searches away from condos and townhomes to detached homes. Furthermore, in an attempt to help the Canadian housing market, the Bank of Canada has issued emergency rate cuts since COVID-19, started pushing mortgage rates to all-time lows.

When all the above factors are considered, 2020 has presented a unique opportunity for both buyers and sellers. And in order to take advantage of these opportunities working with a Real Estate Agent with a grasp of current trends remains the best source for information and guidance when identifying, negotiating, and the eventual sale or purchase of a home. I am honored to assist in this process.

Fatma Nadhir
Keller Williams Real Estate
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