What's ahead for Real Estate in 2020
The current COVID-19 crisis has led to many questions about how the Toronto Real Estate Market will fare in the coming year ahead. While there still remains a great deal of uncertainty regarding the impact of the pandemic, there are now signs emerging indicating how the real estate market will recover once the worst of this pandemic has passed.
The original consensus outlook for real estate in Toronto for 2020 was for healthy gains due mostly to increased consumer confidence and an increase in demand driven by millennial's and first time home buyers entering the market. According to all the statistics, before the pandemic hit this trend was indeed playing out with markets across the country experiencing very healthy demand and significant price growth.
Right up to the beginning of March of 2020, local markets across the country were still on this trend line, supporting the initial optimistic outlook within the real estate world. Home sales in the GTA were up as they were in Canada’s other largest. Toronto Real Estate sales alone rose over 50% over this 3 week period, compared to the same 3 week period last year.
However, as the pandemic took hold the second half of the month showed a sharp contrast. Year over year sales in Toronto were down by almost 40%.
In reaction to the crisis the Bank of Canada made three cuts to lending rate in March, bringing the rate down to 0.25%. While the big banks across the country quickly followed suit, with cuts to their prime rates, this rate discount did not last long. Given the increased financial risk amidst corona virus related job losses and business closures, the banks quickly reacted by raising their prime rates back up to pre-crisis levels.
However, many financial analysts across Canada are now stating that the rate cuts will return, to better align with the Bank of Canada rate. If this happens, Canadians will have access to much lower interest rates on mortgages and lines of credit. When businesses starting to re-open their doors post-crisis, and Canadians return to work, consumer confidence will again slowly start to rise and many hopeful buyers who may have put their plans on hold, will be once again eager to take advantage of the low rates.
In conclusion it is at least now looking like the COVID-19 outbreak will be a tough, but overall temporary blow to the Canadian housing market. As Canada collectively presses pause on the economy. The bounce-back of the Toronto Real Estate Market however is projected to be strong. Analysts are estimating that home sales in the GTA will surge upwards of 50% by the fall.
It’s pretty safe to say that once quarantine and distancing measures are removed, buyers will once again be eager to take advantage of cooler markets and low rates, causing dramatic increases in real estate activity all across Canada.