June 14, 2021 | Toronto Real Estate Market
First up, I know there are no guarantees of a post-Covid anything. We know that any variants of the virus could easily throw a wrench into our post-Covid Toronto lives. Still, things are looking up. There is a good chance that many people will have their second jab by the end of the Summer or early Fall. What does that mean for the Toronto real estate market?
Well, before we get into all that, let’s do a rapid recap of what happened when Covid arrived on our doorstep in a big way in 2020. When Covid first began effecting the market, we were back in March of 2020. The market was very strong at the time, but the new virus shut that down quickly. Though there were some transactions that happened in April and May of 2020, they were significantly down from the usual busy Spring market. No one was thinking about real estate at this time. Everyone was staying home not really sure what to expect. By June, things began to pick up as Covid cases fell. Remote working began pushing people to bigger spaces, in and outside of the city. Leasing took a hit as many renters were not working. The Fall market of 2020 was healthy. There was some concern in the Fall that the real estate market would slip back again to fewer transactions once the Covid case numbers started climbing. That didn’t happen. Prices began to rise in the Fall. This market favoured houses and larger spaces. Condos joined the party in 2021 with rebounding prices. The Winter and Spring had big prices and many more transactions than the most recent year before Covid. In May, we arrived at a more balanced market in most areas, as things settled down.
So, what’s next? What happens when we most of us have our shots and hopefully Covid is well under control? What will the Toronto market look like?
Well, here are my thoughts.
LESS BUSY MARKET AHEAD
I don’t think anyone expected that a pandemic would trigger a real estate frenzy as it has in the first part of 2021. Most individuals would logically deduce that pandemic restrictions would keep most inside, and lead to very little turnover in real estate. Not quite. Logic didn’t really prevail here. Emotion did. All that time at home thinking and pondering had left many people contemplating their lives. We couldn’t travel. We couldn’t go out for dinner. Forget about your extended friends and family off of zoom. Plus, many people’s lives changed. They were spending much, much more time at home. Their home was required to do more things that it had in the past for some. It was a workspace, a school, a gym/yoga studio, and a zoom backdrop. All this time inside our homes with more time led to more time thinking about our futures and how we want to live it. So little was in our control, but there was one place we did have some control over our lives: Real estate. Moving forward, I believe more people will have their focus elsewhere- travel, entertainment, and for some, no more working from home. Because we were able to do real estate during the pandemic, we did it. But now that the other things are going to demand our attention and our money, we will likely focus more on them. People will still buy properties. Life does go on. We will, however, likely see fewer transactions for the rest of this year compared to the first half.
RETURN TO THE CITY
In some ways, the suburbs and towns out of Toronto has had the real big numbers in price appreciation during Covid. The “more space” demand brought on by remote work lead more people out of the city because there is generally more space for a better price. Comparatively, Toronto’s price appreciation during Covid seems quite tame compared to some small towns and suburbs. Once the post-Covid world is here, Toronto will be running on at full capacity once again in a way it hasn’t since Covid. Toronto has had a tougher time during Covid compared to the regions around us. The restrictions have been greater here, and the things we love about Toronto often involve gathering in large numbers. That means, the demand for real estate will be greater in the city than outside of the city once Covid is done, and our city life returns. We’ll also see the return of thing people love – adventurous restaurants, spectator sports, galleries, operas, festivals, and parades. The appeal of the big city will be much stronger after Covid. It won’t just be a Covid hot spot.
BIG RENTAL BOUNCE BACK
Rents took the biggest hit this past year. It makes sense. Individuals who were renting were more likely to have lost their job. But that’s going to change soon. There will be a lot of hiring going on, and the demand for living in the city will come roaring back. Rental prices bottomed out around February of 2021. Expect much more of a bounce back once the city is back on track. It may not happen right away, but as the restrictions fall away and we are allowed to do more, expect this to shift back.
Prices will be a tough one to navigate for the rest of 2021. We have forces that will put downward and upward pressure on prices. The return to the city should create more demand to live in the city once again leading to more demand on real estate, particularly for leasing. This will tip real estate to have better real estate success in the city once again over the suburbs in my estimations. Still, focus will be away from real estate in Fall compared to the Spring. There may be a time ahead of less interaction with real estate. It will be busy again at some point. This summer will be much quieter than last one. I see the summer as a kind of rest after a charged start to the year. Real estate will still move, but we’ll have fewer buyers and sellers out there in the short term.