COVID-19 Impact on Real Estate - May 4, 2020
Update provided to Clients on May 4, 2020. Re-posting here.
The number of new listings declined by 63.7% VYA.
The average selling price was down only slightly by 1.5% VYA to $819,665 and is at least partly due to a shift in housing stock with fewer sales of higher priced properties during this period.
The SNLR is calculated by dividing the total number of home sales in a given period by the number of new listings for the same period. It provides a measure of market competition and is generally used to determine whether a market is considered "balanced" (SNLR between 40 and 60 percent), in favour of the seller, called a "sellers market' (SNLR over 60 percent), or beneficial for the buyer, called a "buyers market" (SNLR under 40 percent).
During the first two weeks of March, before the state of emergency was declared in Ontario, the SNLR for detached and semi-detached homes in the GTA was 54% and the SNLR for condo apartments and condo townhomes was 62%. In other words, the detached and semi market would be considered "balanced" and the condo market was a "sellers" market.
In the last two weeks of March, after the state of emergency was declared, the SNLR for detached and semi-detached homes in the GTA dropped to 37% and the SNLR for condo apartments and condo townhomes dropped to 40%. Both would now be considered "buyers markets". A "buyers market" is characterized by lower prices and buyers having lots of choice. To go from a "sellers market" to a "buyers market" (as in the case of the GTA condo market) in just two weeks demonstrates the extreme shift that took place as a result of COVID-19.
Another example in the ongoing evolution of real estate practices is the rise of the virtual offer presentation. Although nothing beats meeting with sellers in person to walk them through offers on their for-sale properties and answer their questions, the use of video conferencing technology for presenting offers is much better than telephone or email alone. Video conferencing technology allows the REALTOR® to share their screen while highlighting the details of the offer. It also allows the sellers and the REALTOR® to see each other during the presentation so that facial expressions and body language can be read along with verbal cues. At Royal LePage we use Google Meet to present offers. It is secure and simple to use.
The CMHC (Canada Mortgage and Housing Corporation) is a Canadian crown corporation and is one of three companies working with the banking industry to insure mortgages. Depending on the type of default (they have defined four stages), they provide mortgage lenders with the following tools that the lenders use to assess a customer's situation and offer solutions.
Each of the major Canadian banks have programs in place to help their customers through these difficult times. Please click on the links below to see what your Bank is offering.
RBC: https://www.rbc.com/covid-19
CIBC: https://www.cibc.com/covid-19
TD: https://www.td.com/ca/en/personal-banking/covid-19/
BMO: https://www.bmo.com/main/personal/bmo-branches-coronavirus-update/
Scotia: https://www.scotiabank.com/ca/en/personal/scotia-support/personal-banking.html
National Bank: https://www.nbc.ca/personal/advice.html
For information about mortgage default, foreclosure and power of sale, please see here: http://stephhebbrealestate.blogspot.com/2020/05/answering-your-questions-about-mortgage.html
On April 27, the Ontario provincial government announced the plan for reopening the economy in a paper entitled "A Framework for Reopening our Province." The plan refers to three stages:
Stage 1
Here is the link to the government plan.
https://files.ontario.ca/mof-framework-for-reopening-our-province-en-2020-04-27.pdf
That?s it for this update. Please let me know if you have any questions or feedback at Stephanie.hebb@royallepage.ca.
Stay home and stay healthy.
Steph
More reading:
https://www.cbc.ca/news/canada/toronto/april-gta-home-sales-1.5540795?fbclid=IwAR09zt7ehaMbdwNk_gM0Sycz4uF3HnRA2iA-ZVI-nmr1l2S4nSpj1Goo4Sk
https://www.livabl.com/2020/04/toronto-condo-sales-down-april.html
https://www.livabl.com/2020/05/forecast-increase-toronto-home-prices-2020.html
Real Estate Market Overview
GTA Market Fell During First Half of April
As expected the GTA housing market continued to decline in the first half of April. GTA REALTORS® reported 1,654 sales during the first 17 days of April 2020 - down by 69% VYA.The number of new listings declined by 63.7% VYA.
The average selling price was down only slightly by 1.5% VYA to $819,665 and is at least partly due to a shift in housing stock with fewer sales of higher priced properties during this period.
GTA Goes From Sellers Market To Buyers Market in Two Weeks
In the last update, I discussed how COVID-19 impacted the GTA real estate market dramatically as reflected in showings and sales in the last two weeks of March. Let's look at that shift through a slightly different lens - the SNLR, or sales-to-new-listings ratio.The SNLR is calculated by dividing the total number of home sales in a given period by the number of new listings for the same period. It provides a measure of market competition and is generally used to determine whether a market is considered "balanced" (SNLR between 40 and 60 percent), in favour of the seller, called a "sellers market' (SNLR over 60 percent), or beneficial for the buyer, called a "buyers market" (SNLR under 40 percent).
During the first two weeks of March, before the state of emergency was declared in Ontario, the SNLR for detached and semi-detached homes in the GTA was 54% and the SNLR for condo apartments and condo townhomes was 62%. In other words, the detached and semi market would be considered "balanced" and the condo market was a "sellers" market.
In the last two weeks of March, after the state of emergency was declared, the SNLR for detached and semi-detached homes in the GTA dropped to 37% and the SNLR for condo apartments and condo townhomes dropped to 40%. Both would now be considered "buyers markets". A "buyers market" is characterized by lower prices and buyers having lots of choice. To go from a "sellers market" to a "buyers market" (as in the case of the GTA condo market) in just two weeks demonstrates the extreme shift that took place as a result of COVID-19.
Real Estate Market Outlook
Despite the current trend, TD has forecast that housing prices in Toronto will rise by 7.8% in 2020 compared to 2019. The rationale is that the strong January and February gains will help to offset the current situation, and that the real estate market will turn positive again before the end of the year. According to TD economist Rishi Sandhi "Canadian home prices [will] suffer an outsized decline in the second quarter. After which, national average home price growth should proceed at a positive, but subdued pace for the remainder of the year."Selling a Home During COVID-19
As the physical distancing and self-isolation measures continue during the COVID-19 pandemic, changes to home selling and home buying are taking place. Many things, such as the cancellation of open houses and showings, virtual tours, and the use of electronic documents and signatures have been covered in past updates.Another example in the ongoing evolution of real estate practices is the rise of the virtual offer presentation. Although nothing beats meeting with sellers in person to walk them through offers on their for-sale properties and answer their questions, the use of video conferencing technology for presenting offers is much better than telephone or email alone. Video conferencing technology allows the REALTOR® to share their screen while highlighting the details of the offer. It also allows the sellers and the REALTOR® to see each other during the presentation so that facial expressions and body language can be read along with verbal cues. At Royal LePage we use Google Meet to present offers. It is secure and simple to use.
Help for Homeowners
Mortgage Payment Deferrals
The COVID-19 virus is having a huge impact on jobs making it very difficult for some to pay their bills. As of Friday, April 24, 710,000 Canadians had requested mortgage payment deferrals.The CMHC (Canada Mortgage and Housing Corporation) is a Canadian crown corporation and is one of three companies working with the banking industry to insure mortgages. Depending on the type of default (they have defined four stages), they provide mortgage lenders with the following tools that the lenders use to assess a customer's situation and offer solutions.
Each of the major Canadian banks have programs in place to help their customers through these difficult times. Please click on the links below to see what your Bank is offering.
RBC: https://www.rbc.com/covid-19
CIBC: https://www.cibc.com/covid-19
TD: https://www.td.com/ca/en/personal-banking/covid-19/
BMO: https://www.bmo.com/main/personal/bmo-branches-coronavirus-update/
Scotia: https://www.scotiabank.com/ca/en/personal/scotia-support/personal-banking.html
National Bank: https://www.nbc.ca/personal/advice.html
For information about mortgage default, foreclosure and power of sale, please see here: http://stephhebbrealestate.blogspot.com/2020/05/answering-your-questions-about-mortgage.html
Getting Back To Work
On Friday, May 1 Premier Ford announced that some businesses and workplaces would be permitted to reopen today. "We are allowing certain businesses to reopen under strict guidelines because we are confident they can operate safely and adapt to the current environment," said Premier Ford.On April 27, the Ontario provincial government announced the plan for reopening the economy in a paper entitled "A Framework for Reopening our Province." The plan refers to three stages:
Stage 1
- workplaces able to modify operations to meet public health guidelines allowed to open
- essential gatherings of small numbers of people allowed
- non-urgent surgeries start to be offered
- some outdoor spaces open
- more workplaces with mitigation efforts in place allowed to open
- more public spaces open
- gatherings of larger numbers of people allowed
- remainder of workplaces open
- restrictions on public gatherings relaxed (but not completely reduced)
- consistent decrease in number of new cases of COVID-19
- acute care capacity and ventilator availability
- ability to contact trace new cases within one day
- testing capacity particularly proactive testing
Here is the link to the government plan.
https://files.ontario.ca/mof-framework-for-reopening-our-province-en-2020-04-27.pdf
That?s it for this update. Please let me know if you have any questions or feedback at Stephanie.hebb@royallepage.ca.
Stay home and stay healthy.
Steph
More reading:
https://www.cbc.ca/news/canada/toronto/april-gta-home-sales-1.5540795?fbclid=IwAR09zt7ehaMbdwNk_gM0Sycz4uF3HnRA2iA-ZVI-nmr1l2S4nSpj1Goo4Sk
https://www.livabl.com/2020/04/toronto-condo-sales-down-april.html
https://www.livabl.com/2020/05/forecast-increase-toronto-home-prices-2020.html
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