Sales Plunge Hitting Record Low, Prices Stable

So How Has COVID-19 Affected Real Estate?

The city shutdowns happened in mid March and put the real estate market on freeze. After the completion of April, we are now able to get a better picture of what real estate truly looks like during this unprecedented time. 

There were 2,975 sales in April 2020, down by 67% compared to April 2019. In comparison to March 2020, sales were down by 66%. Strong sales in February and the first half of March indicated an upward climb for the spring market prior to COVID-19. Although sales are down significantly, new listings fell at a similar rate at 64%, keeping prices relatively stable. 

Source: TREB MARKET WATCH

Months of Inventory (MOI): Real Estate’s Most Underrated Statistic

The MOI helps us understand the balance between supply and demand. When inventory levels are between 4 to 6 months, we are in a healthy balanced market. 

For some context, Central Toronto has been sitting at around 1 month of supply for houses and condos for the last few years, resulting in an extremely aggressive Seller’s market. While in comparison, the GTA has seen more fluctuation. In the graph below, the GTA’s inventory was trending to a low point similar to the 2017 peak of the market. 

SOURCE: REALOSOPHY.COM

Why does the GTA rental market matter?

The marriage of slow demand and increase in rental supply caused the GTA rental market to be hit the hardest. Several factors include Airbnb units becoming long term rentals, slower immigration, and an influx of new condos being completed this year. Investors who can no longer hold onto a vacant rental unit will likely turn their heads to cash out in the resale market. 

SOURCE: TREB MARKET WATCH

In Summary: So How’s the Market?

If you own a house, prices are pretty much the same as it was before COVID-19 hit. Sellers will likely continue to get reasonable prices for their homes, however expectations are to be managed. 

If you own a condo in the immediate downtown core, the value may have been impacted; so hold out if you don’t have to sell. 

I’d love to hear from you if you are sitting on the sidelines deciding what to do. There are some great properties I have snatched up for my clients during this pandemic. In other words, opportunities may arise due to less competition. I have seen homes at a 5-10% price decline compared to when the market was hot and prices were through the roof a few months ago!