Feels like a Spring Market this Fall
As we enter the Labor Day weekend, restaurants have opened up sidewalk patios, (and are busy), airplanes are flying, daycares are open, and parents and children are getting ready for the resumption of school! Yes, we have new protocols, we are all wearing masks, washing our hands more frequently, social distancing, but a new state of normalcy has returned.
This is also reflected in the real estate market. We started the year with a record number of sales, (February sales were 45% over the previous February) and as of the end of February, the average price in Toronto had increased 16.7% from the end of 2019, with experts predicting prices could increase by as much as 30%.
Then Covid hit. The number of sales in April and May dropped 50% compared to the previous year as homebuyers and sellers “paused” their plans, adopting a wait and see attitude” to decide what to do. By June the “pause” was over as the number of sales and price increases picked up from where they had been prior to Covid.
August 2020 sales set a new record as 10,775 homes sold, up 40.3% from August 2019, and the average price has risen to $912,441, up 11.4% from the start of this year.
I believe the strong market will continue into November when the number of sales will slow down due to the winter season. The one factor that may make this fall / winter sales different is that as Covid-19 becomes less of a concern with better testing and perhaps a vaccine, travel will continue to improve and I believe we’ll see a lot of foreign buyers back in Toronto purchasing, which they were unable to do up to now.
A great investment opportunity exists today. Rental condominiums. Due to the lack of travel, Airbnb, foreign students, concerns if schools will open, condominium prices, have not increased to the same extent as single-family low-rise homes. For the short term, rental rates have dropped, but with the extremely low interest rates on mortgages, profitability exists, and as the market has proven, things will go back to the way they were before! Airbnb will be back, travel will be back, the students will be back, and single people continue to want to live downtown because that’s where the action is!
If you are considering an investment, let’s talk.