One of the best ways to understand the current situation of the Toronto condo market is by comparing before and after the current pandemic. That’s the best way to get a real perspective of the current situation and not be confused by some of the trends we see this summer. For the following analyses, we’ve used data and insights from the Toronto Regional Real Estate Board, CondoMapper, the Canadian Real Estate Association (CREA), and the Canada Mortgage and Housing Corporation (CMHC).
The Toronto condo market before the pandemic
In the last decade, the Toronto condo market was mainly driven by the in-migration from all parts of Canada, as well as from non-residents. Around 100,000 people each year came into Toronto to make a living for themselves. Approximately 40,000 new residential units were introduced on the market. That alone created a shortfall, which continuously drove the prices upwards.
2020 was on track to fit the same mold when we got hit by the COVID pandemic. When Canada closed its borders, as well as when it ended inter-provincial migration, that longstanding trend stopped.
The Toronto condo market after the pandemic
The first restrictions were introduced in March, and their impact was felt all over the property industry. The first two months were the worst as the entire economy, as well as living as we know it was nothing like before.
The property market suddenly was at a standstill. The government, for a moment, had to evaluate the situation, and people didn’t know what’s next.
However, the standstill was just momentary.
Soon after the initial shock, the property market started to show signs of life. In May, Compared with last year, sales were cut down by half. At the same time, the sale to new listing ratio was also around 50%. Yet, prices remained stable throughout this time.
Then came June. The sales in June compared to the sales in June 2019 were still around 60% lower. But in comparison to the month before, May 2020, we witnessed a 29% increase. Both experts and long-time analysts predict that the condo market will do even better in the coming months.
The under 2% mortgage rate also played its role in reviving the property market. Whether there will be a further reduction of the mortgage rates remain unclear, and it depends on many factors.
In this regard, there are several scenarios, and all are tied to the pandemic and whether we will have a functional vaccine. But even in the most optimistic scenarios, even with the latest positive developments, it is not likely that we will have a widely available vaccine in the next three to four months.
During that period, it is expected the economy to start healing, which will have its mark on the condo market. It is fair to expect that residential unit prices drop by a few percents at some point in October or November.
Some analysts believe that an eminent vaccine would jump-start the economy much faster, and people would be back on their feet way sooner. As a result, the in-migration will once again drive the demand for new condos in Toronto. If that happens, we might not see that price drop after all.