Home prices on average remain steady in spite of an April year-over-year drop in sales of 67% according to the Toronto Regional Real Estate Board. Across the entire geographic area covered by the Toronto Regional Real Estate Board, the average price moved up 0.1%. The COVID-19 pandemic also resulted in a 64.1% drop of new listings being introduced to the market, and a 41.4% drop in active listings of properties available for sale on the market.
When you break down prices by property type and by area code, detached homes and condo apartments saw a drop in prices, while semi-detached and townhouses saw an increase.
Home prices in the 416:
Detached homes dropped 7.8%
Semi-detached homes increased 4.0%
Townhouses increased 3.5%
Condo apartments dropped 4.0%
Home prices in the 905:
Detached homes dropped 0.8%
Semi-detached homes increased 4.2%
Townhouses increased 4.4%
Condo apartments increased 1.5%
Detached homes dropped 3.5%
Semi-detached homes increased 7.0%
Townhouses increased 3.8%
Condo apartments decreased 1.7%
There’s no surprise that sales drop during this time. Many argue that it’s not fair to compare April 2020 sales with April 2019 because there was no global pandemic last year. In previous posts, I’ve compared sales on a weekly basis just to gauge how the market is currently doing.
The drastic drop in sales was expected as buyers and sellers, along with their agents, navigate the current market climate to determine what the best strategy is and, most importantly, to focus on staying safe.
Perhaps the real question is why prices are, for the most part, “stable” while sales are dropping?
The reason is simple.
New listings and active listings (supply) is dropping while sales (demand) is also decreasing. While the two aren’t dropping at the same rate, a reduction in both supply and demand would minimize the impact on prices.
The government is preparing to ease up on the lockdown and we will soon see how the real estate market reacts.
Home sales are still happening. Real estate agents are practicing safety measures when helping their clients buy and sell homes. And transactions will rise.
The question is, will prices continue to remain steady?
It’s too early to tell.
Sales will increase over the next few weeks as a result of the market slowly returning to normal, but will unemployment dampen the recovery and affect the demand size of the real estate market?
Will there be enough impact from job losses that buyers who were planning to purchase this year, or were thinking of selling their home and buying a new one, or were contemplating investing in property, will not be able to continue on with their plans?
This month will provide clues as to where the real estate market will be headed for the rest of the year.
If the real estate market is resilient, we will start to see more listings of properties for sale come to the market, and more buyers buying them resulting in an increase of sales.
In addition to supply and demand, we’re going to observe what happens with real estate prices this month.
Compared to April, you should see a positive increase in price.
Compared to last year, prices should remain steady until confidence really returns to the market.
Stay tuned as we observe what’s happening and decide what move you should make in the months to come.