Greater Toronto, Ontario - Tuesday May 5, 2020 - Well, in a nutshell, here’s where we are right now: Sales volume has fallen through the floor - as everyone expected - but the fact that Buyer activity and Inventory levels have retained a degree of balance, overall average prices have remained exceptionally stable - at least on a year-over-year basis...for now… As for what’s next, well, there are as many opinions as there are homes in the GTA. Regardless, from the outset, we’ve believed there’s no way in that hot place that home values can come out of this without a significant correction. The only question is “How much?”. Well, along with that other biggie on everyone's minds these days, "What's the timeline?".
Sales volume's at the lowest levels seen in - literally - decades at 2,975 units. That’s a 67% drop from last April. And down about 63% even compared to the prior month.
The overall average selling price was $820,373 - virtually flat year-over-year, though down from March’s $902,680.
A Few Headlines...
CBC News reported the other day that “Patient creditors, mortgage deferrals, income tax delay” have meant there’s been no spike in bankruptcies...but that “ lawyers and insolvency trustees have been sitting by the office phone, expecting it to ring”. With falling income and rising debt for many, a spike is expected by Fall, 2020.
CBC also reported that Google affiliate "Sidewalk Labs" abandoned its Toronto QuaySide waterfront smart-city project which had been in planning & development since at least 2017.
In an episode entitled, "'Too big to fail': COVID-19 and Canadian real estate" featuring Natalie Obiko Pearson of Bloomberg News, the CBC podcast Front Burner heard that, given the importance of the residential real estate sector combined with the amount of mortgage debt Canadians now find themselves in, it may actually be a "too big to fail" phenom.
Bank of Montreal says somewhere between 30% and 80% of its 45,000 employees will continue to perform at least some duties from home “post-pandemic”. Many speculate that this will cause some to leave the city in favour of the ‘burbs and beyond. It obviously does not bode well for the big office towers and other commercial real estate if that trend materializes.
"The Times They Are A-Changin' " - Bob Dylan, 1964
In Metropolitan Toronto there were 313 Detached home sales, down 67.9%, averaging a sale price of $1,249,730, down 7.8%. In the rest of the Greater Toronto Area, 1,099 “Detacheds” sold in April, down 65.4%, at an average sale price of $907,843. That was relatively stable at -0.8%. All figures herein are year-over-year comparisons unless otherwise noted.
Condo Apartment sales were also hit hard as some buildings stopped allowing any visitors in in the interest of social distancing. One of the bigger fears emerging here is the issue of squeezing into an elevator with other people, not to mention the broader issue of sharing a building with hundreds of other people. Problem. For any tower these days - not just the residential ones. In T.O., 482 Condo Apartments sold, off 69.9%, at an average of $612,300, down an even 4%. In the balance of the GTA, just 185 units sold on Toronto MLS, down 75.3%, at an average price of $489,654, up 1.5%. Go figure. Unless inventory falls through the floor - meaning "real, accessible inventory" - which it may given the reasons cited above, among others - we expect Condo Apartment prices to come back down to earth relative to the low-rise sector.
As the physical distancing measures begin to lift, we also expect to see very strong demand for Bungalows in Toronto & The GTA [“and beyond”, for that matter] as the downsizing trend accelerates, in part for the reasons we’ve noted and linked to here. In fact, Bungalow prices will very likely see relative support as a result of the sheer rarity of that style of home combined with demand from younger people and matures alike as more people decide seek “their own backyards”. Also, given that many Bungalows are now owned by matures & seniors, Bungalow listing inventory may well be stifled to some degree in the nearer term as those folks wait longer to list their homes for sale - if that's their intention - given their increased risk from the COVID-19 pandemic compared to younger people.
The number of newly listed homes fell 64.1% to 6,174. Total Active Listings were actually more stable at 10,561 which was “only” 41.4% lower than last April. Those figures give us a projected “Forward Inventory” [Active Listings / Sales] of over three-and-one-half months. We had about two months of inventory at this time last year. The “Absorption Rate” - the rate at which the market “absorbs” new inventory - [Sales / New Listings] stood at .482 compared to .526 one year ago.
“The necessary social distancing and economic impacts associated with COVID-19 clearly impacted home sales and listings throughout April 2020. However, REALTORS® have been able to facilitate some transactions on behalf of buyers and sellers through the use of innovative techniques including virtual open houses. TRREB has also provided a live stream virtual open house option on Member listings featured on our public websites, and I would expect the use of these innovative techniques to increase as some level of social distancing remains in place for the foreseeable future.” – John DiMichele, TREB CEO, Michael Collins, TREB President & Jason Mercer, Director, Market Analysis, TREB
The average time it took to sell a home in Toronto and the GTA was 19 “Listing Days on Market”…unchanged from last April. The “Property Days on Market” - representing the total number of days a property was listed with the same brokerage before selling - was 24, or “7.7% faster” versus 26 days a year earlier.
As always, thanks for dropping by. #StaySafe We at theBB.group wish "You & Yours" all the very, very best as we work through this crisis. Drop a line anytime if there's anything we can help with on the real estate - or any other - front.
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