Strengthening Toronto Real Estate Market Amidst COVID 19 Lockdowns
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The pandemic has been hard on Canadians. The intermittent lockdowns, locks on local businesses, and deserted roads are commonplace across the country. No wonder, on the back of the fears of a rebound, lower-income levels, negligible immigration, and high unemployment, Moody’s suggested a drop of 7% in real estate prices in the country.
But, those were the predictions. On the ground, Toronto was in the red zone. It had staggered restrictions in place and saw the closure of businesses in November, but the real estate market did not follow any predicted trend. It has pleasantly surprised experts with its upward trend in real estate.
Many variables add up to the positive change. Let’s try and understand them.
Changing Needs
The demand is heavily skewed towards single-family homes. In fact, single family homes are keeping the real estate market strong. Not only are the listings for the single-family homes lower, they are also in greater demand. Owners of single-family homes understand the economic climate and are not putting their properties on the market, which is in turn keeping the prices up.
On the other hand, condo market does not paint a similarly encouraging picture. Condo listings are on the rise. However, there are no takers, which has led to the market going soft.
The major factor that has led to this shift is the work-from-home movement. With this new style of working becoming a norm rather than an exception, people are reconsidering their housing needs. They do not need to stay near city centers where their offices are. They can shift to bigger family homes where they have a separate space to work peacefully through the day. So, the changing needs of the real estate buyers is affecting the market.
Reduced Number of Listings
The homeowners who may have lost their job due to the pandemic are not forced to make distress sales. There are multiple state-run programs that allow them to keep their homes and out of the real estate market. Moreover, banks have also offered these struggling homeowners an option to defer their mortgage payments. These factors have contributed to manage the inflow of listings. Since there is not a flood of distress sales, it keeps the supply in check and the prices of real estate assets are still holding up.
Lower Interest Rates
In the wake of the pandemic, banks are pushing for borrowing. They are attracting first-time homeowner to borrow home loans for cheaper rates. Moreover, such aspiring home owners can also qualify for bigger homes which they now qualify for. This makes home loans highly attractive even if the economic figures look gloomy.
What to Expect in the Future?
Real estate market trends are primarily affected by the needs of the general public. With people looking for bigger, detached, family homes, it is going to strengthen. On the other hand, people selling their condos and defaulting on their mortgages as their regular payment schedules kick in, will drag the market down.
At this point, it looks like the Toronto market is only going to move in the upward direction.
