Property Management Blog

Covid-19s Effect on Real Estate in Ontario

Thoughts & market analysis

For the sake of keeping it direct & simple in these uncertain times, we felt as though this was a necessary blog post to keep each of you updated. Let’s talk – how do the recent global

It seems as though every time you press the refresh button on your browser, countless new articles appear. There is always a new worry about health, family and employment. That being said, I have yet to find a direct article that addresses the mundane worries in which we are left wondering “what about everything else?”. What happens to my mortgage? My property has been on the market, is my agent still working? Do I have to lower my asking prices?

Experiencing identical concerns myself, I’ve sifted through these countless articles hoping to put it all together. Let’s go through a rundown on the Real Estate Market of the GTA, and the “everything else” in the back of our minds when it comes to our real estate investments.

With the high volume of tenants & homebuyers staying indoors, our housing market is bound to decline in sales. Based on a report using Toronto Real Estate Board data in an article found  here (attach link to narcity), it shows a steep plummet of approximately 50% in House & Condo sales throughout the GTA in only TWO weeks. That is beyond a dramatic decrease, just as we were being told Toronto rent prices were close to surpassing those of London, England, and nearing those of New York. 

To further crunch the numbers (referencing a table I came across on Zoocasa) the number of sales of detached homes & semis in the GTA dropped by 53% between March 17-30. There were 1,153 home sales in the GTA as compared to 2,435 from March 1-16. Condo sales also dropped over 50%, going from 1,541 to 729 in the same comparison of both periods. 53% is bound to rise with the growing “Semi-Lockdown” state of Ontario.

With all those numbers, how will this affect you maximizing on your investments?

In the short term, we can absolutely predict a large scale “cool-down”  on real estate transactions. It was initially predicted that the April-June real estate market would reach a record-breaking sales season. Buyers/tenants will likely hold off on their home purchases & searches amid uncertain health and economic conditions. Sellers anticipating a higher market value return on their property will no doubt hesitate to accept a lower offer. This will likely result in a Buyer-Seller stalemate. 

Although it can be argued that more motivated buyers are still actively perusing the market in urgent need of a home due to: work relocation, divorce, end of their current lease, just sold their property, etc. Those who don’t have urgent real estate needs will most likely stay on the sidelines as the situation escalates. For the short term, it is safe to say this will be a slow season.

Without a doubt, the market will eventually bounce back. It’s hard to predict the length of time and effect this pandemic will have upon us. The last time the Ontario real estate market witnessed a buyer-seller stalemate was in the spring of 2017, when the Fair Housing Plan was introduced. Though the circumstances cannot be compared to the current ones, the outcome was very similar in the limited amount of people wanting to participate in a real estate transaction amid uncertain times. 

Should you lower your asking price? Quite honestly, that depends on your personal situation. Although mortgages are able to be deferred, you will have to consider the added interest, reduced credit, and the financial loss you will take. If your property is in a more urgent need of being rented, you may want to consider lowering the asking price. Taking a loss of a couple hundred dollars may be more worth it than losing out on a month or two of rental income. To make this decision, you should have your finances mapped out with an Eminence investment analyst or accountant. 

What is being done about it? 

As of right now, we have not heard anything of a rent freeze, however the government has implemented some measures to aid both homeowners and tenants at this time. These include:

  • Bank of Canada Makes 2nd Emergency Rate Cut
  • Real Estate Named an Essential Service in Ontario
  • Some Homeowners May Be Able to Defer Their Mortgages Up to Six Months
  • A freeze has been placed on all evictions
  • Ontario Property Tax Bill Could Be Delayed

For more information, on those measures, click here (insert link 2)

As an Investment Real Estate firm, our reports show a growing need for “Virtual” or “Video” unit tours. Thanks to modern technology in the form of Social Media, we have been able to effectively utilize Facetime & Whatsapp to conduct live showings, and platforms such as Instagram, TikTok, and Twitter to provide video footage of each unit. For questions & tutorials on those, follow our instagram @EminenceRealtyInc. 

To conclude, this situation will absolutely have short term effects on yourself as a homeowner regardless of whether you own two properties or 27. With real estate as an essential service, the long term effects cannot be foreseen. After all, property will always be in demand. We’ll keep you updated as the situation progresses. If you have any questions or opinions, please feel free to email them to info@eminencerealty.ca. We’d love to hear it. Until next time!

Sources: 

https://www.narcity.com/real-estate/ca/on/toronto/toronto-home-sales-have-halved-over-the-last-2-weeks-of-emergency-status 

https://www.zoocasa.com/blog/covid-19-real-estate-news-roundup/

https://www.moneysense.ca/spend/real-estate/how-will-covid-19-impact-the-real-estate-market-in-canada/ 

https://www.zoocasa.com/blog/toronto-buyers-market-covid-19/

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