| Oct 21, 2020
If you have been watching the housing market in 2020, then you’re likely as surprised as the rest of us at how resilient real estate has been, in light of the pandemic and its many aftershocks. We’ve seen some interesting yet unsurprising trends emerge, such as the spike in sales and prices across suburban and rural markets, and the decline in urban condo activity. Overall, activity is up and prices are way up. According to the latest data from the Canadian Real Estate Association, average prices rose 17.5 per cent year-over-year, hitting a new high of $604,000 in Canada. In Toronto that average price is more than double that, at $1,487,122. Why has the market continued to persevere, despite the global pandemic and the resulting recession? Real estate has fared quite well through this unprecedented year, and there are a few reasons that explain why.
Low interest rates
The Bank of Canada made the unprecedented move to lower its kept interest rate not once, but twice in March, and it continues to sit at a record low of just 0.25 per cent. Borrowing money has never been this cheap, which bodes well for home buyers hoping to get into the prices Toronto housing market. And there’s more good news – the Bank is not expected to raise interest rates any time in the foreseeable future, meaning purchasing power should stay high.
Pent-up demand
Despite a temporary blip on the transactions radar in early spring, many housing markets across Canada, including Toronto, carried on through the worst of the pandemic and came out on top, thanks to pent-up demand. If you’ve been watching the market, you know that housing inventory is low. Like, “barely there” low. According to the Toronto Regional Real Estate Board, home sales hit a record high in September, with 11,083 homes sold – a record high for the month of September.
Who’s Buying?
There’s no doubt that the COVID-19 lock-downs have hit many people’s pocketbooks hard. However, while the service and tourism industries have taken a hit, other industries have continued to earn and many professionals who were able to transition to a work-from-home model have not experienced this cash crunch. Add to this the growing trend of people focusing (and spending!) more on “home” versus abroad, the already high demand for the limited supply of homes has been exacerbated even further. Hence, the rising prices and this competitive seller’s market.
These facts tell us a few things. First, Real estate continues to be a smart investment. (Just think “long term.”) Second, if you’re employment is secure and you have a down payment saved, now could be a great time to buy a home. Sure, it’s super competitive out there, but with the right agent and the right advice, you can get your own slice of Toronto’s lucrative real estate pie. YAY!