The COVID-19 pandemic has had far reaching implications around the world, forcing entire nations to lock down in order to slow its spread and free up critical resources. Canada hasn’t been spared from the effects of the pandemic, with businesses and industries everywhere being affected by provincial lockdowns and social distancing measures. With so much happening in the country, it’s natural that many have concerns about the future of the Canadian real estate industry – especially with so many conflicting reports and predictions being issued on an almost daily basis.
While it’s true that the spread of COVID-19, specifically the economic uncertainties it has created and social distancing measures put in effect to slow the curve, has slowed down the normally hot Canadian housing market, it’s far from being stopped completely. Despite all the doom and gloom surrounding the market, the outlook isn’t nearly as bad as was previously expected.
Home prices not expected to nosedive
Prior to the COVID-19 pandemic’s arrival in North America, Canadian real estate prices were predicted to rise by up to 3.7% by the end of the year. Once March arrived, it was clear that those predictions were now optimistic – CMHC warned that home prices could fall by up to 18% due to the financial uncertainty, higher mortgage debt, and increased uncertainty caused by the ongoing crisis. Thankfully, this drastic fall in home prices doesn’t actually appear to be happening – RE/MAX continues to report that while inventory in most markets is down, home prices should remain stable or experience a single digit price correction if demand remains steady.
While inventories in most markets are down from previous years, the pandemic hasn’t done much to quench the country’s insatiable demand for real estate. Many brokers are reporting scenarios where multiple offers are received on listings, with others stating that homes in Toronto are selling at or just below asking price. The Toronto real estate market has yet to experience any significant decline in price, and if trends continue, the drastic fall predicted by CMHC isn’t likely to take place.
Great news for short-term rentals
Perhaps the most affected segment of the Toronto real estate market were landlords hosting short-term rentals through Airbnb and other services. When the country closed its borders and enforced strict social distancing measures back in March, the short-term rental market almost disappeared overnight. The lack of tourists and closing of the short-term rental market caused some landlords to seek out long-term tenants in order to fill their now vacant properties.
Thankfully, relief is finally here for short-term rental properties. The Ontario government recently announced that short-term rentals will be allowed to resume beginning Friday, June 5th. The reopening of short-term rental properties applies to homes, cottages, lodges, cabins, bed and breakfasts, and condominiums. The reopening comes as a massive relief to short-term rental landlords in Toronto.
Real estate industry quickly adapting to changes
Social distancing guidelines affected the Canadian housing market in a big way, forcing realtors and landlords to take their services online, showing properties through video chat apps or pre-recorded videos. Realtors with serious buyers have also been forced to create a safer environment for buyers and sellers, providing masks, gloves, and other PPE during showings to reduce the threat of contamination. Thankfully, the real estate industry has been able to roll with the punches, adapting quickly to the changes in order to continue offering services to Canadian homebuyers.
As the province continues to reopen businesses and allow employees to go back to work, it’s expected that the Toronto real estate market will gradually return to its pre-COVID activity. As this happens, consumer outlook towards the housing market will bounce back, sellers will feel more confident about listing, and demand will eventually return to normal. Until then, all we can do is continue to be patient, and see what the market has in store.
HighGate Properties is a full-service Toronto property management company, specializing in residential and commercial properties and real estate investments. For more information about what the property management experts at HighGate can do for you, contact us today.