September 1, 2020 | Fall Market
2020 may be one of the toughest years to predict where Toronto’s real estate market will pivot next. Covid-19, with all its economic, social and health implications, has taken real estate in directions that could never have been anticipated by anyone’s crystal ball or data from 2019.
So far we had a near shut down of the Toronto real estate market in late March to mid May because of Covid. At that time, we didn’t know what direction the virus would take in this region, and we didn’t really have a sense, for those first few months, what was coming next.
Along came June and July where the real estate market came roaring back to life fuelled by low interest rates and a Spring market that was pushed two months ahead. It felt like there was an eagerness for everyone to get back to life again. Prices have been a little more tame for condos, but for houses, the competition was strong. New price heights in most of Toronto.
Even in August, the amount of properties coming out have been much higher than any other August I can remember. It was the quietest Spring I’ve ever had. And the busiest summer I’ve ever had.
Now for September… This Fall really feels like a fork in the road. This next phase in real estate may determine where the market will go for the long term. So far, we’ve just been reacting. We’ve had the panic and uncertainty of the early days of the pandemic, followed by a desire to get back to normal life. Now, we’re in big picture territory. We’re looking to the future and what Covid-19 will do to us in the year ahead, not just the next month. We’ve become much better at living with the virus, but I still think we are getting our head around how long it may be with us, and what the long-term impact could be.
Traditionally, the Fall market takes flight after Labour Day. August is traditionally the slower month of the year along with December. This year is different. So, instead of stating where I think things are going to go – I have no idea – here’s what may influence the Fall Market.
THE SECOND WAVE
If you speak to most friends and family (or an immunologist), you’ll find there is a strong belief out there that we’ll have a second wave. How difficult or how long it will be is tough to say. The general consensus seems to be we’ll have a second wave around October, though it may be later or earlier or not at all. Luckily, we are better able to handle an influx of new cases than in the early days of Covid. Still, it may alter the real estate trajectory once again. If we have a second wave, it will slow things down for a second time this year, though likely not as slow as the Spring has been. Once the second wave passes, we will see a rush back to the market. The Toronto case numbers will be a very useful guide for how busy Toronto market can be.
AFTER THE GOVERNMENT RELIEF
I think many folks are worried about what will happen after CERB and other government relief stops flowing sometime later this year, unless we have a further extension on that relief. I suspect this will impact the rental market and the investment properties a little more heavily than other property types. I’m not sure this will have much on an impact on the sale of houses. It may effect condos more since they are more heavily connected to renters.
CONTINUED LOWER RATES
Because the world remains uncertain, I don’t think we are going to see any raising of the rates anytime soon. I think the lower rates have played a big role in having people come back to the market. So, on the upside, rates will stay low.
THE DESIRE FOR MORE SPACE
Where you live has played a much bigger role in your life this year. For some, your home is not only your domestic space, but now also your work space, your gym, and possibly a school. Even if you don’t work at home and you have no kids, and hate the gym, you have spent more time in your home since there have been fewer places to go. No TFC games. No TIFF. No festivals. Because of this, plans have been accelerated to find bigger spaces for those who can afford them. This is one of the reasons there is such a demand on houses right now. Houses have more space, and often a yard.
LIMITED TRAVEL AND IMMIGRATION
This will put the most strain on the condo market and rental market. New immigrants fuel the rental market and buyers’ market, and many condo units stand in for hotels. These Airbnbs rely on travel. Though there is still travel, it may be awhile for the condo sector and rental sector to bounce back. Good news for investors who are buying as this will be reflected in prices.
GOOD NEWS ON A VACCINE
Though we may not be as fast as Russia at producing a vaccine, if we have some solid news that one is working and may be ready in the next year, I think this will bring a certain positivity that will help people imagine life without Covid. If we start to see a time where Covid can be very much under control, the uncertainty will leave the market. People will start planning for after Covid, not just during Covid. Businesses will rebound.
What has been proven so far in 2020: Toronto’s real estate market can be very resilient. Does that mean it is incapable of changing direction or having a slump? No. Still, I think if we look back instead of forward, many of us are surprised at how strong the market has been, and how quickly it can bounce back. The Fall will be an interesting time to watch. It will set the stage for the real estate market well into next year.