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RE/MAX Canada | Why Have Toronto Real Estate Prices Not Crashed? – RE/MAX News

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In only a few short months, the COVID-19 pandemic decimated the global economy and permanently altered our lives. When the world rang in a new decade, nobody could have envisioned a virus outbreak and the resulting “new normal” for consumers, businesses and governments for the years to come. Some experts forecast that it could take years before we return to any semblance of normalcy, whether in the way we interact with each other or how financial markets function.

Since the public health crisis has affected every facet of the economy worldwide, all eyes have been on the red-hot Canadian real estate market. Closer to home, buyers and owners alike are waiting to see if Toronto will finally witness a drop in condominium and house prices. While it’s difficult to project long-term trends, recent figures indicate real estate Toronto prices are far from crashing.

Did April Showers Bring May Flowers? 

In April, the economic fallout of COVID-19 and the many social distancing guidelines triggered a deep freeze in the Toronto regional real estate market. A month later, there was an unexpected rebound.

According to May figures released by the Toronto Regional Real Estate Board (TRREB), home prices in Toronto and across the GTA were up 3 per cent year-over-year, to $863,599. In the 416 area, detached houses climbed 2.7 per cent and condos picked up 1.8 per cent. However, fewer transactions are taking place, with 4,606 properties changing hands in May – a 53.7-per-cent decline year-over-year but up 55.2 per cent compared to April 2020.

Overall, the real estate market has held steady throughout the financial crisis. While transactions have slumped since the coronavirus pandemic crippled the Canadian economy, average prices have remained resilient.

Why Have Toronto Real Estate Prices Not Crashed?

So, what is happening in one of the country’s hottest markets? The broader numbers show many people out of work, businesses shut down and rising household debt levels. At the same time, there has been sustained activity in the number of buyers compared to available listings. This is one of the chief factors in supporting price growth relative to last year’s pace, despite shifting market conditions.

Those who have kept their employment and refrained from dipping into their down-payment savings are in a good position to take advantage of lower borrowing costs. In March, the Bank of Canada (BoC) imposed a 50-basis-point emergency cut to interest rate, lowering its benchmark rate to 0.25 per cent. This is allowing buyers to borrow greater amounts of money at a lower cost over time. The institution has also pumped billions of liquidity into the financial system, making lenders more confident in issuing loans.

The federal government has employed measures to prevent a full-blown economic meltdown. Canada Mortgage and Housing Corp. (CMHC) has supported lenders to cover the cost of mortgage deferrals. In a broader policy tool, the government implemented a wage subsidy program to help employers keep staff on payroll, helping millions continue to collect paycheques and cover their bills.

According to the Canadian Bankers Association (CBA), approximately half a million big-bank borrowers have been approved for mortgage payment deferrals during the pandemic. Banks are ostensibly already planning to work with customers in establishing flexible repayment plans. This has prevented homeowners from flooding the market with properties to avoid defaults.

Put simply, there are still plenty of buyers due to the market-friendly monetary and fiscal conditions driven by Ottawa and the central bank.

The Use of Technology in Real Estate

Another reason for the healthy level of activity within the Toronto real estate market is the commendable and innovative solutions adopted by real estate professionals to help transactions take place as smoothly and safely as possible.

The sector has done an incredible job adapting to the situation. At the beginning of the pandemic, the Ontario government announced that real estate offices were an essential service, allowing them to continue operating during this chaotic time. But the real estate industry has taken other necessary precautions as well.

To mitigate any health risks, realtors have utilized technology to support the home-buying process. They have leveraged digital listings, virtual tours, video conferencing, e-document and electronic signatures. When in-person showings are required, agents have continued to show properties under strict safety measures that include wearing face masks and gloves, having scheduled appointment, and showing the house or unit to no more than two adults at a given time.

What is the Future of Toronto Real Estate?

Over the last 6 weeks, there have been some dire projections for Toronto and the national real estate market. However, as the plethora of economic data has already highlighted, many of the findings are a lot better than what was forecasted earlier in the pandemic. Although the industry consensus is that the future is uncertain, the economics of the outbreak suggests it is not all storm clouds ahead. The fundamentals of the housing market are the same as they were before the pandemic: a huge demand and a short supply. This has not changed, and until it does, you can expect real estate prices in Toronto will not crash.

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Toronto real estate market is headed for a cliff – NOW Magazine

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Condo supplies in Toronto will help drive home prices down further


Toronto real estate prices are headed for a cliff. The condo market will drag it further down according to the Canada Mortgage and Housing Corporation (CMHC).

“Anticipated increases in the supply of condominium apartments will lead to softening prices next year,” says the CMHC in an email to NOW.

Toronto home prices hit an all time high in June. But the CMHC has been warning that those prices will begin plunging in the fall. Unemployment and low immigration due to the COVID-19 pandemic are two main factors.

According to the CMHC, the lack of demand for oil on a global scale is another factor. Restricted mobility during the pandemic is leading to falling oil prices. That will further exacerbate the impact on oil-producing provinces and Canada’s economy. Extended mortgage deferral deadlines, lower mortgage rates and government stimulus packages are all meant to soften the blow.

Increase in Toronto real estate supply

According to the Canadian Bankers Association (CBA), more than 760,000 Canadians have opted to defer their mortgages or skip payments. That’s about 16 per cent among those with mortgages in bank portfolios.

There will be an increase in Toronto real estate supply from homeowners who can no longer defer mortgages. That supply will couple with inventory from the condo market fuelled partly by short-term rental restrictions during the pandemic.

“More units could also sit on the market longer as more buyers wait on the sidelines,” the CMHC says. They attribute that decline in demand to job losses and general financial uncertainty.

“A significant number of condominium units under construction (54,000 units currently) will make its way to the resale pool and will further increase supply.”

Condo rental market

The Toronto Regional Real Estate Board (TRREB) is reporting how hard the condominium rental market got hit in the year’s second quarter. According to TREBB, GTA realtors reported 7320 apartment rentals in Q2, which is down 24.8 per cent from the same time last year. Meanwhile, the number of rental listings were up by 42 per cent from last year.

“There are two key take-aways from the Q2 2020 rental market statistics,” says TRREB president Lisa Patel in a statement. “First, COVID-19 clearly impacted the demand for rental condominium apartments, due to restrictions on showing units and job losses across many sectors of the economy. Second, we saw the continuation of the pattern experienced over the past year, with year-over-year growth in rental listings far outstripping growth in rental transactions.”

Average condo rental prices also dipped to $2,083 for a one-bedroom and  $2,713 for a two-bedroom.

“Increased choice led to more negotiating power for renters, resulting in year-over-year declines in average rents in the second quarter of 2020,” says TRREB’s chief market analyst, Jason Mercer, in a statement.

Condo sales

Home owners can no longer use Home Equity Line Of Credits as down payments on investment properties. WE Realty broker Odeen Eccleston tells NOW that the new CMHC rule will reduce the pool of potential buyers.

Re/Max Hallmark Realty broker Meray Mansour adds that declines in condo demand will be felt more outside of the central core. She says highly saturated areas like Yonge and Eglinton are also vulnerable. Mansour adds that COVID-19 is forcing people to spend a bulk of their time indoors while trying to keep social distance, so elevators and a lack of outdoor space has made condos less appealing.

However, the average condo sale prices still managed to rise by 5.1 per cent year-over-year to $619,707 in Q2, according to TREBB. That increase occurred while listings were down 21.6 per cent and sales dropped 50.8 per cent year-over-year.

TRREB has also reported that city council has approved a plan to create more housing opportunities in Toronto. TRREB is specifically pursuing options that fall between detached and semi-detached homes and condos.

Toronto real estate right now

Odeen Eccleston has observed an exodus from the city inspired by COVID-19. People who are working from home are now swapping out their expensive Toronto real estate for cottage country.

“They can get so much more for so much less in a lot of these cottage countries,” says Eccleston.

But for now, Eccleston and Mansour say the heat is still on in the Greater Toronto real estate market.

“In the 905, especially in the below $700K price range, its still on fire,” says Eccleston.

“I’ve even sold a few condos with multiple offers in the Beaches and surrounding areas,” Mansour adds. She notes that some condos remain appealing despite the trends. “In areas like the Beach and Leslieville, or places where condos are more low-rise loft or boutique style, the demand is still there. Especially condos with really large terraces.”

Both realtors are cautious of the impending downturn. However, they wonder if Toronto’s real estate market can whether it better than expected. For now, they’re telling sellers to be safe and act now before we reach that cliff.

@JustSayRad


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Calgary Real Estate Board trains its focus on market conditions – TheChronicleHerald.ca

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That light we see in Calgary’s housing market tunnel is, unfortunately, not the end of the tunnel.

It’s yet another train, but it’s slowing down, according to the Calgary Real Estate Board’s (CREB) Q2 2020 Quarterly Update Report.

“Calgary housing sales slowed by 35 percent compared to the previous year,” says the CREB report. “This is better than original expectations, thanks to June figures that were far stronger than initial estimates. The pullback in new listings in the second quarter caused inventories to trend down, preventing a more significant decline in prices. The second-quarter benchmark price trended down compared to the first quarter and eased by 2.3 percent compared to last year, just slightly above initial forecasted levels.”

So, yes, that’s still a train a-coming, but, “the extent of the impact may not be as severe as estimates from three months ago. Those original estimates of unemployment levels and job losses have been revised. Job losses and high unemployment rates are still expected, but the magnitude of the decline has eased,” says CREB.

“Furthermore, since May, oil prices have improved. This is not enough to change capital spending plans, but with West Texas Intermediate prices back in the $40 range, the situation has improved significantly from the low levels recorded in May.

“While the situation may look brighter than it did a few months ago, it is also important to note that challenges remain. Our local economy is still facing record-high unemployment rates, with significant job loss occurring not only in areas associated with the shutdown (e.g., accommodation and food, retail trade) but in our professional, scientific and technical services sector. Some of the jobs in areas impacted by closures will start to return as our economy re-opens, but the challenges weighing on the energy sector will likely have a lingering effect on employment.”

Any kind of market weakness and uncertainties are obviously going to pose downside risks to housing demand, especially in the upper end of the market, says CREB.

“Recovery for higher-paid positions will likely take longer than recovery in other areas of the economy. This will cause some persistent challenges for the upper end of the housing market, having a greater impact on those higher-priced homes versus product in the lower price ranges,” says the report. “Overall, we continue to expect city-wide benchmark home prices to ease by just under three percent this year and sales activity will remain weak compared to the already low levels recorded last year.”

Despite the wide range of expectations on home prices, CREB does not expect a stronger price decline in 2020 for several reasons:

• Adjustment in supply. Demand has fallen, but so have new listings and inventory levels. This is preventing significant gains in the months of supply slowing the downward price pressure.

• Support provided by lenders and government is expected to cushion the blow from COVID-19, preventing a more significant price drop this year.

“As we move into the second half of this year and into 2021, there remains significant downside risk. If jobs do not return as anticipated and the support from lenders and government ends, we could start to see a faster rise in supply relative to demand. This may cause stronger price declines in the market entering 2021.”

Calgary’s housing market cooled slightly in July from the previous month’s activity, but June was an unexpected and pleasant surprise, says Jesse Davies, founder and realtor of the Jesse Davies team at Century 21 Elevate Real Estate.

“June surpassed a lot of people’s expectations with the detached market seeing a decrease of 21 percent in active listings from this time last year, which in turn has made for a slim-pickings type of market for buyers eager to take advantage of suppressed pricing and low interest rates,” says Davies, adding there was an incentive to buy before the end of June. “The new lending rules implemented by Canada Mortgage and Housing Corporation on insured mortgages also contributed to the better-than-expected June stats, as buyers rushed to purchase before the July 1 deadline.

“July is trending very similar to June with total sales volume up around five percent compared to last year. The balance of the summer and fall should see similar results and a lot will depend on interest rates staying unchanged, if we experience a second wave of the virus and what unemployment levels taper off at.

“One thing to consider is the net migration and immigration to Calgary, basically coming to a standstill for the last quarter due to travel restrictions from COVID and what type of short- and long-term ramifications this will have on demand and pricing.”

Here are Calgary market stats, comparing July to June this year and July to July last year (based on figures current as of July 27 each year, courtesy of CREB).


Total market

June 2020

July 27, 2020

July 27, 2019
Sales 1,747 1,489 1,439
New listings 3,335 2,557 2,431
Median $420,000 $420,000 $418,000
Average $463,604 $463,834 $453,776

Single-family
Sales 1,092 938 881
New listings 1,892 1,397 1,441
Median $473,250 $482,500 $473,500
Average $539,708 $541,691 $528,643

Attached
Sales 428 336 311
New listings 769 609 552
Median $330,000 $329,450 $325,000
Average $361,346 $372,759 $385,624

Apartments
Sales 261 215 247
New listings 668 551 438
Median $234,900 $240,000 $249,999
Average $258,064 $266,490 $272,552

Copyright Postmedia Network Inc., 2020

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N.B. housing market 'blew up' during COVID-19, real estate board says – CBC.ca

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New Brunswick’s housing market is alive and well, despite being in the midst of a pandemic. 

According to the Canadian Real Estate Association, 1,230 houses were sold across the province in June — a 25.4 per cent increase from last year and the highest level for any month in history. 

“Right now we are experiencing a market in the past two months, like no other,” said Sharon Watts, executive officer for the Real Estate Board of the Fredericton Area, Inc., which extends as far as Perth-Andover, Oromocto and surrounding areas.

In June, the Fredericton area saw an increase of 53 per cent on house sales compared to last year. The northern region saw a 25 per cent jump, while the greater Moncton and Saint John areas saw 21 and five per cent increases.

Why are so many people buying houses?

Watts said the year started off as “another banner year” in January and February, with a slight increase in the number of house sales from 2019.

Then the pandemic hit in late March and the number of sales dropped. Once restrictions were lifted in May, sales slowly started to bounce back.

Then in June, the housing market “blew up.”

“It just rebounded like no other,” she said. “It’s a catch up.”

At the same time, sellers have also received overbids from as little as $100 to as high as $60,000 over the asking price. 

The average price of homes sold in New Brunswick was a record $199,327 in June, rising 14 per cent from last year.

A seller’s market 

Kelly Murdock, of Gardiner Valley Realty in Oromocto, has been a realtor for 15 years. She has never seen a year quite like this.

“This is the first time in my career we’ve had such a predominant seller’s market,” she said. 

Because of this, Murdock said people who weren’t typically looking at selling might have listed their house anyway, adding a bit more variety to the market. 

“People that have maybe looked at things and didn’t see things they wanted, started to see things that wouldn’t traditionally be on the market,” she said. “Something unique, something different.”

And with low cost in interest rates and in housing compared to other Canadian cities, people are buying houses in New Brunswick from all across the country.

She recently had five virtual buys from people who hadn’t seen the house in person. Many times, offers will be put in the same day or a day after a house is listed.  

“When something goes on, the first thing is, ‘let’s go now.’ And secondly, ‘is it available?'” she said. 

Not enough houses to sell

But there still aren’t enough houses to compensate for the number of people looking to buy them.

In a news release, the Canadian Real Estate Association said there were about 1,534 new residential listings added in New Brunswick in June 2020. This number has dropped by 3.6 per cent on a year-over-year basis.

“When you get a listing that’s in a hot area and the price is right, it’s going to go fast,” Watts said. 

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