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If you missed Part 1 in our series, make sure to read The New Normal: Life in a Coronavirus World.
As the coronavirus pandemic worked its way through Ontario in March and April, the BREL message to our clients (and readers) was clear: It was time to Pause, Watch, Wait.
We didn’t know how the virus was going to affect our city or if our hospitals could cope. We didn’t know what kind of government support would be available. We couldn’t predict how the stock market and our economy would react.
It wasn’t the time to buy or sell a home.
Fast forward eight weeks later: we still don’t have all the answers. But as we’ve watched COVID-19 unfold across Canada and the world, we do know some things for sure:
- Our provincial, federal and city governments have our backs. They introduced dozens of programs to bridge people, companies and the economy through the pandemic. The programs weren’t perfect – many companies (including us) fell between the cracks – but Canada repeatedly demonstrated a commitment to making fact-based decisions, choosing people over profits and moving forward as a unified country.
- For the most part, Canadian banks showed compassion and grace through the worst weeks of the pandemic. They honoured mortgage commitments, processed mortgage deferrals without too many questions and pre-pandemic sales were able to transfer to their new owners on time. They embraced digital signatures, allowing sales to close without ‘in-person’ meetings with lawyers. The worst-case scenarios we prepared for in March didn’t happen.
- Interest rates are low and will remain low for a long time – there’s a long economic recovery ahead of us.
- Toronto is still an awesome city – we saw it every day, as communities and neighbours pulled together to help and support each other, and fought to keep our local businesses afloat.
- Home is central to our lives – even more so than pre-pandemic times.
While much uncertainty remains because of coronavirus (and likely will, until there’s a vaccine), the Ontario economy is beginning to re-open, and with it, the real estate industry. We won’t pretend to be able to predict the future – and we’ve never believed in hyping ‘it’s a good to buy! It’s a good time to sell!’. So instead, today, we’re just going to report what we’re seeing as the Toronto real estate market begins to ‘unpause’.
But Before We Begin: Reeewind!
Pre-COVID, Toronto was experiencing some of the craziest real estate market conditions in recent memory. Buyers flocked to see new listings, with bags of money and a seemingly insatiable appetite to buy. Sellers, meanwhile, repeated their yearly ritual of delaying listing their homes for sale until the spring. That combination led to some of the fiercest bidding wars we’ve ever seen.
The reality of what the virus had in store for us became evident in mid-March, and we were soon under a State of Emergency. Buyers and Sellers stayed home. The volume of sales plummetted nearly 70% in April. Prices – while still higher than in 2019 – declined from their March 2020 highs.
So What’s Happening Now?
What Our Website is Telling Us
As a digital-first brokerage, we get a sneak peek into the future of Toronto’s real estate market on our website. We watch how our online traffic ebbs and flows, the pages people are visiting, how they interact with our site and the questions people ask. It’s almost as though our website is a pathway into the minds of Toronto Buyers and Sellers and gives us early warning signals of what’s about to happen. Our site has helped us prepare for past market turbulence and while it didn’t predict a pandemic, we knew the market was about to pause in March, long before it was reflected on the MLS. And at the end of April? We saw our website user behaviour change. Toronto Buyers and Sellers were signalling they were getting ready to jump back in.
Unlike past market shocks which were dominated by calls from panicked Sellers or desperate Buyers, these days, we’re hearing from a relatively balanced number of Buyers and Sellers. All are being cautious – unsure about new safety protocols and how buying and selling have changed – but the motivation to make a move is evident.
BUT: Today’s Buyers and Sellers aren’t necessarily the same people who were thinking of buying and selling a few months ago.
These days, we’re seeing increased motivation and activity from:
- First-time Buyers hoping to (finally) break into the market
- People wanting to escape the city for bigger homes, more private green spaces and less density
- People separating from their spouses
- Upgraders and upsizers hoping to take advantage of a slower market to score their next home
- Professionals seeking different types of spaces and communities to accommodate their new work-from-home realities and freedoms
- Doctors, nurses and other essential worker professionals who didn’t experience the same Great Pause as the rest of us
- Second-home Buyers with good down payments and secure income, looking to escape this summer
While it hasn’t yet materialized, we expect to soon see increased interest from:
- Investors wanting to sell their condos occupied by in-arrears tenants
- Airbnb owners facing new restrictions and costs, as a result of COVID-19
- Families seeking multi-purpose, multi-generational homes in order to avoid long-term care facilities
- Sellers who need to sell, as a result of financial and/or job changes (the various government stimulus/support programs and the 6-12 month mortgage deferrals will hopefully prevent an avalanche of Sellers)
- Opportunistic Buyers and investors looking to benefit from someone else’s misfortune
What Showing Data is Telling Us
Toronto brokerages use one of a few back-office systems to book and track showing appointments on properties for sale and offers. One of the most popular (and the one we use at Bspoke Realty) is Broker Bay. They’ve been providing weekly updates of activity and their latest report tells a story of a market that is no longer ‘paused’.
- Starting on April 30, there’s been a steady increase in the number of showings booked through the system.
- For the week of May 4-10:
- Showings were up 149% over the same week in April, and 26% over the previous week
- The number of offers registered was up 158% over the previous month, and 17.4% over the previous week
- The number of properties sold were up 72.4% over the previous month, and 15.7% over the previous week.
From the Great (real estate) Pause, a new real estate market is emerging in Toronto. The New (real estate) Normal is here.
Make sure to check back as we delve into what the New Normal in real estate looks like for Sellers and Buyers.