COVID-19 Impact on Real Estate

June 14, 2021

COVID-19 Impact on Real Estate - May 17, 2021

Emailed to clients on May 17, 2021

Hi all,

I’m writing this update from a warm, sunny spot where I can see the spring flowers in the garden. The nice weather, along with the fact I’ve had my first shot, gives me such a sense of optimism about the future.

Here’s this month’s update.

Market Update

April home sales in the GTA set a new record, and were more than 4x the number of sales in April of last year. (Keep in mind that April 2020 was the first full month of COVID.)

There were 13,663 sales in April 2021, up by 362% compared to 2,957 sales in April 2020.

Total Residential Sales

The average selling price in the GTA was $1,090,992 and remained relatively flat compared to March.

Average Selling Price

Click below to watch the video highlights.

Is the market starting to slow down?

Referring to the April market, RBC economist Robert Hogue said, “After soaring to outer space in prior months, home re-sales came down to a lower orbit — still generally strong but less excessively so — in Vancouver, Toronto, and Ottawa.”

In the GTA, home sales went against the usual seasonal trend and declined 12.7% from March 2021 to April 2021. New listings followed a similar pattern declining by 8.4% month-over-month.

Despite the decline in month-over-month sales, prices remained strong. The GTA continues to favour sellers over buyers as demand outpaces available inventory. In one example of multiple offers driving prices up, a couple recently sold their mid-town Toronto semi-detached for $1.6 million. There were 16 offers and the property sold for $600,000 over the asking price. Read the story here.

Rise of the suburbs

A new survey of first-time homebuyers published by BMO found that 47% of FTHBers plan on buying in the suburbs. Not surprisingly, that number was even higher in Ontario and B.C. where city prices are exorbitantly high. Affordability (44%) and larger houses (41%) were the main reasons to choose the suburbs over the city.

Suburban housing in the GTA has proven to be a good investment. Over the past year, homebuyers who purchased in the suburbs have seen their property values rise by almost twice as much as city buyers. On average, suburb buyers have seen their property value grow by 30%, while Toronto buyers saw property value growth of 16%.

Market Forecast

Earlier this month the CMHC released its Housing Market Outlook forecasting a 10.7% to 14.4% increase in home prices compared to the 2020 national average price. What a difference a year makes. You may recall that last year the CMHC took a lot of heat when it forecast that home prices could fall up to 18% due to the impacts of the pandemic.

Cooling down the market

With the recent CMHC forecast that the price of an average Toronto region home could increase by more than $275,000 by the end of 2023, there is concern that the market is overheating. According to a Nanos Research poll conducted for Bloomberg News, about 70% of Canadians said the sharp increase in home prices was a major problem for the economy.

Increasing housing supply is the only true solution to Canada’s housing shortage, but according to TD Chief Economist Beata Caranci, “The quickest route to cooling this market and squeezing out speculation comes down to the interest rate channel.”

In response to concerns about the housing market over-heating, the Bank of Canada announced a change to previous policy. Previously, the BoC had planned to keep the current 0.25% overnight rate until 2023, but now, citing an improved economic outlook, the BoC has signaled that rates may begin to rise again in the back half of 2022.

Selling during COVID

Regardless of high prices, some people still need to buy a home. The top five most affordable large cities in Ontario are Windsor, London, Barrie, Kanata and Guelph. The top five most affordable medium-sized cities are Sarnia, Thunder Bay, Sudbury, Stoney Creek and Sault Ste. Marie.

Help for Homeowners

On Thursday, May 13 the provincial government extended the province-wide stay-at-home order until June 2. People are to leave their homes only for food, health-care, exercise or work that can’t be done from home.

The stay-at-home order has been successful in bringing down daily case counts from a high of over 4,000 to over 2,000 at this point. ICU capacity is gradually easing up which is encouraging news.

Over 7 million vaccines have been administered in Ontario with the expectation that everyone 18+ will qualify for a vaccine by the end of the month.

For an up-to-date guide on who qualifies for a vaccine and where to get one, please click here.

Vaccine hesitancy

As the vaccine rollout continues in Canada, conflicting information about which vaccine to take is contributing to vaccine hesitancy. Health Canada says that any vaccine is a good vaccine and outweighs the risks of COVID. The National Advisory Committee on Immunization has changed their guidance on the AstraZeneca vaccine a number of times based on reports of VIPIT (vaccine-induced prothombotic immune thrombocytopenia), a rare but deadly type of blood clot.

Here’s the history:

Health Canada approves the AZ vaccine for use for those 18+ – Feb 26
Due to concerns about VIPIT, NACI recommends for under 65 only - March
NACI changes their position and recommends for over 55 only – March 29
NACI recommends for over 30 – April 23
NACI says that the Pfizer/Moderna vaccines are “preferred” over AZ – May 3
Ontario stops giving AZ as the first shot – May 11

With the flip-flopping information about the safety of the Astra Zeneca vaccine, it is not surprising to me that people are skeptical about what they are hearing. I was pleasantly surprised by the findings of a new Abacus Data poll showing that 71% of people have either already had a vaccine or will take one as soon as they are able. A few weeks ago the number was only 63%, suggesting that vaccine hesitancy is declining.

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

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Stephanie Hebb Mississauga Realtor

COVID-19 Impact on Real Estate - May 17, 2021

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