COVID-19 Impact on Real Estate - December 11, 2020

 

Sent to Clients on December 11, 2020.   Here’s this month’s update:   Real Estate Market Overview   November was another strong month for real estate sales in the Greater Toronto Area.   There were 8,766 sales in November 2020, up by 24.3% compared to 7,054 sales in November 2019. Sales have slowed down compared to October, but this is explained by seasonality.   Total Residential Sales The average selling price was $955,615, up 13.3% versus $843,307 in November 2019.     Average Selling Price New listings in November were up 33.5% compared to last year.   Sales to New Listing Ratio Days on the market were down 20% from an average of 35 days in November 2019 to an average of 28 days in November 2020.   Days on Market Generally, sales growth for single-family homes in the ‘905’ outpaced growth rates in the ‘416’. Due to a doubling of new listings compared to last year (see last month’s newsletter for an in-depth explanation), condo apartment prices in the ‘416’ softened slightly this past month.   Real Estate Market Outlook   While economists continue to debate what will happen in the Canadian housing market over the next several months, I see a number of reasons to be optimistic about the future.   1. Federal relief measures have propped up real estate so far.   Much of the strength of the real estate market over the past few months can be attributed to the relief measures brought in by the government. Mortgage deferrals have provided temporary debt relief to those who needed it in the face of reduced employment. Income supplements have helped those in need to have some cash flow. Low interest rates have opened up the option of home ownership to a number of would-be buyers.   With less of an ability to go out and spend on meals and purchases, Canadian have been saving their money and redirecting it into housing. 2. So far the ‘mortgage deferral cliff’ has not led to a huge number of defaults.   While it is still early, there has been no dramatic increase in the number of mortgage defaults and certainly no surplus of property being dumped on the market and liquidated to settle debt. In fact, one study showed that 30% of respondents who opted for mortgage deferral did so out of an abundance of caution rather than a real need. 3. Demand for home ownership remains strong among millennials.   A recent study conducted by Properly shows that less than half (48%) of millennials say they are happy with where they live and they are three times more likely to want to make a purchase in 2021 than the rest of the population. Their wish lists include detached homes (45%), backyards (57%), more space (44%), proximity to green spaces (34%) and, not surprisingly, better space to work from home (28%). 8% of millennials say they plan to purchase a new home in 2021 compared to 4% of the rest of the population.   4. Commitment to immigration will help the real estate market.   As outlined last month, the Federal government updated immigration targets for the next three years to help make up the shortfall from closed borders due to COVID-19. This will help the rental market as well as residential re-sales.   5. Vaccines are headed our way.   Last, but most certainly not least, there is good news on the vaccine front. Pfizer, Moderna and Janssen (Johnson + Johnson) all have promising vaccine candidates in the final stages of approval with the expectation that the first doses will be available in early 2021.   Despite the above, some economists continue to predict a correction due to mortgage defaults and foreclosures. Veritas Investment Research, a Canadian firm catering to the investment community, predicts price declines in Canada between 4 and 11% with a 15 to 26% drop in Toronto.   Selling a House During COVID   Virtual Market Valuations   I wanted to share something that some of my clients are finding really useful. In order to keep everyone as safe as possible from potential exposure to COVID-19, we have been doing virtual market valuation meetings.   Traditionally, in order to provide a market valuation, a realtor would visit the property and walk through it with the homeowner. Lately we have been using meeting technology, such as ZOOM to meet with the homeowner remotely. Using their phone or tablet, the homeowner can take us on a virtual tour of the home, giving us what we need to properly estimate market value. 5 Reasons to Sell During Winter   Often people think that they should avoid listing their homes for sale during the winter, typically the slowest season in real estate. However, there are a number of reasons to consider moving ahead with your plans to sell during the winter, particularly this year when the demand for housing has been so high.   Winter buyers are serious buyers, usually not tire kickers or looky-loos. There is generally less for-sale competition meaning you will get more exposure and potentially greater demand. January is a big month for corporate relocations. Relo buyers are motivated to move quickly, and your home might be just what they are looking for. In the GTA the “spring” market for buyers usually starts in February. Buyers are house hunting in February, hoping to move in in April or May. Some homes look better during the winter. Consider staging a cozy interior, highlighting fireplaces and using lots of rugs and throws. Outside the snow can cover a myriad of landscaping problems and look clean and pristine.   Record low rate mortgage   One bank is making it very attractive for homebuyers needing a mortgage. On December 4, 2020, HSBC announced a 0.99 percent rate for a new five-year, variable closed term mortgage (based on a $200,000 mortgage). This is a record low rate in Canada.   Help for Homeowners   Since the last update there have been new programs to help homeowners in Peel Region impacted by COVID-19.   Passage of Bill C-14   On December 2, 2020, the federal government introduced Bill C-14 to provide assistance to families with young children, support students and invest in resources to protect the health and safety of Canadians. Included among the provisions are:   income support for low- and middle-income families entitled to the Canada Child Benefit, with up to $1,200 in 2020 for each child under the age of six; eliminate interest on repayment of the federal portion of the Canada Student Loans and Canada Apprentice Loans for one year; provide up to $505.7 million in funding support for long-term care facilities; provide up to $133 million in funding support for mental health tools and substance abuse programming; provide up to $262.6 million for a suite of COVID-19 initiatives   Federal funding of isolation sites in Peel   On November 26, 2020, the federal government announced $6.5 million in funding for Peel Public Health to establish a safe, voluntary isolation site for those having or exposed to COVID-19. This initiative is in response to parts of the community where overcrowding makes it impossible to safely self isolate at home.   Cases of COVID-19 in Mississauga   MISSISSAUGA TOTAL CASES COVID-19 Impact on Christmas Activities   Despite health officials all but pleading with people to curtail their holiday celebrations, a new study shows that many people are planning to gather anyway. The study by Angus Reid Research found that 30% of Canadians still plan to visit relatives or friends over the holidays. The number in Ontario was slightly lower at 27%.    10% of Canadians were planning to travel outside their own community to visit relatives or friends. The number in Ontario with 8%. That’s it for this update. If you missed any of the past COVID-19 Impact on Real Estate updates you can find them on my blog here: http://stephhebbrealestate.blogspot.com/   There is also a ton of other information there about buying or selling real estate on the blog.     Please let me know if you have any questions or feedback at Stephanie.hebb@royallepage.ca.     Stay safe.   Steph     More reading:   https://betterdwelling.com/canadian-real-estate-prices-to-fall-up-to-26-bay-street-firm-warns-institutions/   https://torontostoreys.com/millennials-homeownership-report-properly/   https://torontostoreys.com/bank-of-canada-mortgage-deferral-data-covid-19/