{"id":13030,"date":"2020-03-30T06:00:00","date_gmt":"2020-03-30T10:00:00","guid":{"rendered":"https:\/\/www.zolo.ca\/news\/?p=13030"},"modified":"2022-01-14T12:54:57","modified_gmt":"2022-01-14T17:54:57","slug":"gta-housing-market-covid-19","status":"publish","type":"post","link":"https:\/\/www.zolo.ca\/blog\/gta-housing-market-covid-19","title":{"rendered":"Impact of COVID-19 on Greater Toronto\u2019s Housing Market (Infographic)"},"content":{"rendered":"\n

For most of March 2020, Canadians faced uncertainty regarding their health and financial stability. As each week went by \u2014 and the need to #FlattenTheCurve became greater and greater \u2014 the impact of COVID-19 grew. <\/span><\/p>\n\n\n\n

It came as no surprise when industry professionals, real estate boards and trade associations associated with real estate began to issue modified work requirements, or complete suspension of ‘business-as-normal.’<\/p>\n\n\n\n

Real estate trade in the Greater Toronto<\/a> Area was no exception.<\/p>\n\n\n\n

Rather than hold open houses, Realtors and their brokerages transitioned to virtual open houses. Instead of in-person property viewings, agents began to show homes using video-chats and online tours. Offices closed. Appointments were made and completed over the phone and through email.  In the Greater Toronto Area, everyone braced themselves for in industry about to grind to a halt. But it didn’t.<\/p>\n\n\n\n

To many people\u2019s surprise, the Greater Toronto real estate market is showing few signs of slowing down, at least on paper, even as measures to #FlattenTheCurve become more and more extreme in an effort to stop the transmission of COVID-19 .<\/p>\n\n\n\n

Why Isn\u2019t Toronto\u2019s Real Estate Market Slowing Down?<\/h2>\n\n\n\n

As we try to grapple with the immediate and prolonged impact of COVID-19 on the GTA’s housing economy, most of us look to the data \u2014 a way of quantifying the near- and long-term impact of this devastating pandemic.  <\/span><\/p>\n\n\n\n

But real estate sales activity is a lagging indicator \u2014 and price corrections take even longer to adjust.<\/span><\/p>\n\n\n\n

According to analysis by Zolo, the current March 2020 data doesn’t show a decrease in sales activity in Greater Toronto’s housing market. On the contrary, it shows that the market started strong. If the pandemic had not hit, it’s quite possible the GTA would’ve entered one of its hottest spring selling seasons.<\/p>\n\n\n\n

Impact of COVID-19 in the Short-Term<\/h2>\n\n\n\n

What does all this mean going forward?<\/p>\n\n\n\n

The Canadian Real Estate Association revealed the month of February was particularly hot for year-over-year sales, which rose 27% nationwide, indicating the busy spring buying season had started early. Similar performance was recorded for Toronto and Vancouver<\/a> homes for sale; transactions rose 45.6% and 44.9% year over year in those cities, respectively. <\/span><\/p>\n\n\n\n

However, COVID-19 will impact the real estate marketplace both in the short- and long-term.<\/span><\/p>\n\n\n\n

Despite this strong start, Zolo anticipates that slower sales activity will begin to show up in the data in April and May 2020.<\/span><\/p>\n\n\n\n

Housing market activity can take 30 to 90 days to close, so as more buyers hold off on shopping and purchasing property, more properties will sit on the market. <\/span><\/p>\n\n\n\n

Impact of COVID-19 in the Long-Term<\/h2>\n\n\n\n

The market will bounce back.<\/span><\/p>\n\n\n\n

While we can’t predict how and when, we can make an educated assumption that the real estate market across the Greater Toronto Area will recover from the impacts of COVID-19.<\/p>\n\n\n\n

To get a more realistic idea of the impact of this pandemic, and how long it will impact the GTA, Zolo analyzed past health and financial catastrophes. From SARS to MERS, to the dotcom crash, the Great Recession of 2008\/2009 and even the economic impact of the mortgage stress test. By examining sales, in relation to the 5-year rolling average, and sales prices, we begin to see that the real estate market can and will survive this current pandemic.<\/p>\n\n\n\n

For example, the housing market in the GTA experienced a major slowdown after former provincial government introduced the Fair Housing Plan in the spring of 2017, and the federal government introduced the mortgage stress test on January 1, 2018. While the provincial plan did not directly hinder a buyer’s capacity to purchase property, it did have a psychological impact that helped cool the market. However, this situation abruptly ended after the federal government announced the new mortgage stress test. Within months housing prices shot up dramatically, before activity dropped precipitously in 2018, which prompted declines in sold prices. The impact of these measures could be felt throughout 2018 and half-way into 2019, when buyers returned to the market and home sales (and prices) began to increase, yet again. <\/span><\/p>\n\n\n\n

To help appreciate the impact of specific health and economic events, Zolo analyzed sales and house price data going back to March 2000. By examining sales activity, and comparing it to the 5-year rolling average, and average sold prices, we can see that only a few markets experienced declines amidst some of the hardest economic and health-related circumstances within the last 20 years.<\/p>\n\n\n\n

Housing Market in<\/span> Toronto<\/h2>\n\n\n\n

Average Sale Price for the month of March (as of March 26, 2020): $1,050,651<\/p>\n\n\n\n