How’s the Coronavirus Going to Impact Toronto's Real Estate Market
Real estate buyers, sellers and investors alike all over the world are becoming increasingly concerned about the coronavirus’s (COVID-19) impact on their local real estate markets as the number of affected individuals continues to spread.
Of course, when making any type of prediction it’s always good to have some data to analyze to use as a foundation for your forecast. The first big data point to look at when it comes to current coronavirus outbreak and it's effect on real estate is to understand that COVID-19 is caused by a new strain in the family of viruses characterized as coronavirus, and that this outbreak is also similar to the epidemic in 2003 caused by Severe Acute Respiratory Syndrome (SARS) which in fact was also a coronavirus.
With SARS, Toronto was one of the first places in Canada to experience SARS-related emergencies. Strict protocols to prevent the virus from spreading were quickly implemented and like today social distancing was encouraged.
Despite the challenges resulting from SARS, the Canadian economy and specifically the Toronto housing market did not experience a slowdown in 2003. Canadian GDP grew to $892 billion in 2003 from $758 billion in 2002, and it ultimately crossed the trillion-dollar threshold in 2004.
As for property markets, its also important to note that the G.T.A. really bore the brunt of SARS in Canada. If anyone was expecting a slowdown in housing sales or moderation in housing prices, Toronto would have been the first geography for this to take place. But it didn’t.
Real estate sales data from 2003 in Toronto shows no apparent signs of weakening or declines. Sales increased to 78,898 units in 2003 from 74,759 units in 2002. Similarly, the average sale price increased by around $20,000 during the same time period. Essentially, the growth in sales and prices in 2003 was in-line with all the then forecasted long-term trends.
COVID-19 to date has already caused more deaths than SARS did in 2003. The uncertainty about how long the threat will last and how quickly it can be contained will weigh heavily on the markets for some time to come. However, since the epicentre of the breakout is relatively far from Canada, it is probable that the adverse impacts on Canadian markets will be very moderate and potentially have no adverse effects whatsoever.
Evidence from Toronto in 2003 suggests that the real estate and housing markets in Canada did not experience any noticeable adverse impact from SARS. The effect of coronavirus, if any, again is likely to be moderate in the short run. If the overall economic challenge persists over a much more extended period, Canadian housing markets are likely to become even more attractive to investors who would like to move their capital from markets with ominous health risks to the relatively safe markets such as Canada.