Toronto Real Estate Review & Outlook: June 2020
A lot has happened in the news recently, so you may not have heard as much about the increased activity in the Toronto real estate market. The May 2020 Toronto sales data is out and we have something to share: Toronto real estate is bottoming out and the market is on its way for recovery.
"Toronto real estate prices are bottoming out and we expect stronger property prices in June."
Toronto Real Estate In April 2020
In April, we were in the middle of the COVID-19 lockdown and there was fear that the virus will spread out of control and general uncertainty about the global economy. People weren’t leaving their homes, and the reality is that buying properties wasn’t essential and top of mind for most people.
Sales transactions in Toronto from 2,756 in March down to 1,029 in April. This is a 63% drop in sales activity!
- Detached prices declined the most with a 17% price drop vs. March 2020. These properties are generally more expensive which means there’s generally less demand.
- Condo prices dropped a similar percentage with a 16% price drop vs. March 2020. This higher volatility is because segment generally has more speculation and more entry-level investors who are more prone to cash flow issues.
- Semi detached homes only saw a 5% drop vs. March 2020 due to its higher fundamental demand.
Toronto Real Estate In May 2020
We saw a lot of positive news in May, with new COVID-19 cases going down, announcements for the reopening of cities, and the S&P 500 recovering back to pre-COVID levels.
In Toronto real estate, we saw a lot more interest from buyers. The number of sales transactions went from 1,029 in April up to 1,487 in May – a 45% increase!
- Detached prices recovered the most because they dropped the most in April, currently selling at a 3% discount from March highs.
- Condos recovered recovered by 10%, currently offering a 6% discount from March highs.
- Semis are almost recovered back to pre-covid highs.
"It's time to action to benefit from a buyer-friendly environment with less competition, discounts on purchase prices, plus lower mortgage rates."
What Does This Mean For Real Estate Investors right now?
The fundamentals of Toronto are strong and this does not change in the long run. With lower prices right now, it’s a great time to invest in a property for higher long term returns. In fact, our team added to that sales activity number and invested in 2 more properties ourselves in May!
With CMHC tightening lending rules starting July 1, we expect more demand in June for properties priced under $1MM. This will keep property prices for condos, semis, and lower priced detached homes strong while our city starts phase 2 of our reopening plan. As the economy continues to recover over the next months, we anticipate buyers to slowly come back onto the market, keeping property prices relatively stable.
Residential real estate generally drops less than other investments and is quick to recover. So if you are thinking about buying an investment property, buying investment properties now will mean higher long term investment returns for you.
This is the time to take action so you can benefit from a buyer-friendly environment with less competition, discounts on your purchase price, plus lower mortgage rates.