February 2, 2021 | Toronto real estate 2021
I don’t think there is a person out there who does not want 2021 to be different, or more specifically, better than 2020. And though we would like to see Covid in the rear view mirror, it’s pretty clear we have a significant amount of Covid road ahead of us. I know. Not the most pleasant of thoughts. But I’m here to tell you that Covid’s presence is having a much different impact on Toronto real estate in 2021 than 2020. Yes, Covid is still with us, but we’re responding to it very differently. Because of that, the real estate market is not the same.
Here’s what’s different in 2021 so far:
According to our Toronto Covid case numbers, we have more positive tests for Covid in 2021 than we had for most of 2020. Of course, testing is much more available now than the beginning of the pandemic.
Like the Spring of 2020, we are currently in a lockdown. There is, however, a huge difference with these two lockdowns. During the Spring 2020 lockdown, the real estate business almost stopped. Although real estate is considered an essential service, there were very few transaction is the early Spring of 2020. Why is that? Well, we really didn’t know how the virus was spread. We didn’t know if the economy would crash. We didn’t know when this misery would end. There were many more unknowns. And those unknowns made our fear keep us from moving forward, and going outside amongst other people to see properties.
Now fast forward to January 2021, we are in lockdown again, but the fear is much less than before. And by that, I don’t mean we have become more careless. We still have the same safety protocols in place as we did in the Spring, and clients I currently have follow these protocols. There’s just a much stronger desire to get on with planning life. The time we have spent indoors in 2020 has led many of us to plan our futures more than ever before, and for some, to buy real estate.
LOW TO SUPERLOW
I’m sure almost everyone who is reading this around the time it was written will know that interest rates are historically low. Of course, we have been hearing that for a very long time. But this time they are really low, even super low. And of course, all this lowness is spurred on by a government trying to keep the economy afloat with low interest rates. Fair enough. In turn, these low interest rates have led to low mortgage rates to the delight of many of my buyers.
It seems that these low mortgage rates are working well, possibly too well in some areas. Buyers are back in the market with a vengeance in 2021, and ready to take advantage of these low interest rates. But we may have a problem. It’s a familiar problem in Toronto. There are now more buyers than sellers in much of the market. So, competition and bully offers are becoming a bigger part of the Toronto real estate market again. Much more so that during any time during Covid in 2020. With this limited inventory, we are starting to see a run-up in prices on many houses and condo townhomes. 2020 had some of this heat is some markets, but there are more buyers out now. And interest rates are even lower in 2021.
CONDOS ON THE SHOPPING LIST
Some folks thought condos would not have a bounce back until Covid was far behind us where immigration can start up again, service jobs would come back, and the rental market was back on track. I’m not sure that’s the case. It seems that the condo market is already making some kind of comeback. Buyers seem to have returned to that sector of the market in large numbers. In some sectors of the condo market, like the condo townhome, there really wasn’t a lot of suffering going on during 2020, but even in downtown apartment condos that had suffered some slipping in price last year, I am seeing more interest. Prices for downtown condo apartments have not jumped up, but there are many more transactions than before. In 2020, Covid had condos on the defence, but I think 2021 may change that. Downtown condo apartments do have a way to go, but it’s not suffering the chill it had in 2020.
THE FINAL FALLOUT
What we did not have in 2020 was the the end of the subsidies for those whose income had been greatly impacted by Covid. That is very likely coming to an end in 2021. That reckoning has not happened just yet, but it should come this year. How much of an effect the end of deferred mortgages and income subsidies will have on some people’s wealth is hard to tell. I don’t expect the numbers in the residential sector will be big enough to throw off the market, but time will tell.
To return to my first point, Covid, in most of 2020, was about uncertainty. No one really fully understood the impact it was going to have on Toronto real estate or their lives in general. With the vaccine on the horizon in 2021, there is a near future where Covid should be under control, though there are no guarantees. And with that, there has been a return, and a strong desire to move past Covid after months inside. There is more confidence in a future with much less Covid after the vaccines fully roll out. And there is less fear around a chaotic real estate market because of Covid. It seems many people have their views set on the future.
2021 should be a very different year for Toronto real estate than 2020, especially for the condo market. It won’t bounce back over night from the hit it took in 2020, but it should change direction at some point this year. Houses will continue their price gains in 2021. Early indicators tell us that 2021 is proving to be off to a very strong start. I think we may actually end up where we were BEFORE Covid arrived last year. I feel we are in a similar market that was brewing in January 2020 to mid March 2020. Prices moving up quickly, competition in desirable properties and neighbourhoods for condo townhomes and houses. 2021 won’t see this fast rise in downtown condos right away, but it may eventually spread there too.