COVID-19 impact on the Toronto real estate market
Real estate analyst and vice president of PPS Realty Brokerage, Ali Salarian, described the possible impact of COVID-19 on the real estate market in Toronto.
The COVID-19, also known as the new Coronavirus, has put the global economy in turmoil since its first appearance in Wuhan, China during November 2019. Here in Canada, and specifically Toronto, we’ve had different responses from GTHA real estate market.
TRREB stats showed a 45 per cent increase in sales transactions and a 16.7 per cent increase in price in Feb. 2020 compared to the same period last year, blaming the lack of listings inventories in the market, which was as a result of the outdated stress test rule that was implemented in 2018. The federal government stepped in on Feb. 18, 2020, and changed the new mortgage rules in a bid to boost the supplies in the market. However, BoC decided to cut the interest rate to 1.25 per cent in Mar. 4 following to its 2020 economic outlook.
Oil prices dropped later on due to the low demand for crude oil by China. Eventually, the Canadian dollar has weakened in value against the U.S. dollar, right after the BoC monetary policy moved to further cut interest rate to 0.75 per cent on Mar. 13 in a bid to boost the economy accordingly. This resulted in more cashflow into the Canadian market from overseas, as well as encouraging local buyers to invest in real estate with a low-interest record rate.
As the World Health Organization escalated the case to a pandemic level in recent weeks, Canada has taken appropriate measures to flatten the curve of this virus outbreak through social distancing and self-quarantine. In such economic conditions, demand will fly to basic necessities, and homebuyers will prefer to stay home while sellers try to sell quickly to avoid possible recession and get maximum profit from their sales. Is this enough to reduce the number of multiple offers and have a normal price growth on COVID-19 Term?
The Canadian Construction Association has also compiled a number of resources on the topic. You can access that here.