As new Covid19 cases in Toronto drop from triple to double digits, we hope this newsletter finds you well. It’s been almost 4 months since the beginning of the state of emergency but for many of us, it feels like 4 years.
Although the coronavirus continues to dominate headlines, for the first time ever, Toronto’s average real estate prices broke the $1M mark. The real estate market showed resilience as detached and semi-detached properties increased from a year ago by 14% and 22% respectively, while condo apartments increased by 6%. Year-over-year sales transactions continued the same downward trend for the third straight month as the total number of transactions declined by 12%, much less compared to the 60% declines experienced in April and May 2020 versus 2019.
Many market watchers were expecting price declines with the pandemic causing economic fallouts. The Canadian government forecasts the upcoming deficit to be $343bn compared to $34bn pre-pandemic. Industry mainstays such as Hertz, Neiman Marcus and Brooks Brothers have declared bankruptcy or closed retail locations with Toronto unemployment hovering at approx. 12% – twice the rate a year ago. Despite these headline grabbers, a look at supply and demand for housing explains unprecedented prices.
The updated Ipsos survey of buying and selling intentions conducted for the Toronto Real Estate Board in May 2020 provides insight behind the price trends. On the demand side, 27% of polled respondents are likely to purchase in the next 12 months which is a slight drop compared to 31% in spring 2019. Meanwhile on the supply side, listing intentions declined with 21% of respondents being likely to sell their property in the next 12 months compared to 32% in the spring of 2019.
These intentions explain why there have been 24% less transactions in the first half of 2020 compared to first half of 2019. Moving forward, it doesn’t look like prices will soften as interest rates are at their lowest point in the past 5 years, active listings as of June 30, 2020 are down 10% while months of inventory remained virtually the same at 1.9 months from a year ago.
As I ponder what’s next for the market at the midway point of 2020, I look back at historical 1st half numbers from prior years. I’m reminded of 2017 when a similar rapid 1st quarter price growth precipitated government action with the April 2017 introduction of the Fair Housing Plan and Non-Resident Speculation Tax. These measures along with tighter mortgage rules instituted in late 2017 allowed prices to recover throughout 2018 and 2019 and had it not been for the pandemic, we would have set new highs a few months ago. My sense is if re-opening the economy occurs with only a few hiccups and confidence is restored, it will be difficult to see prices easing any time soon.
Shen Shoots The Breeze
- We’ve been enjoying and entertaining in our backyard more than ever as travelling to more exotic locales is not a current reality. Mosquitos are generally the most pervasive and uninvited guests that crash the party. A friend of ours introduced us to Thermacell repellents that uses a heat-activitated repellent to create a protection zone against mosquitos. They’re not cheap but hoping the $35 investment will work. We are looking forward to having human-only guests and none of the bug variety at our next gathering. Do you have any tried and true mosquito repellent products that is not the spray on type? If you’ve purchased Thermacell products, have they worked for you?
- I love to cook. I love watching cooking shows, reading cookbooks, online recipes, talking about cooking tips with fellow cooking aficionados… However I really don’t like being in the kitchen on a hot summer day especially if there’s a lake that needs a swimmer, a bike that needs riding or friends that need seeing. Yesterday we got home at 6:30pm and scrounged up some radishes, tomatoes, lettuce and avocado that were already in the pantry and made a super easy salad and had cheese and bread for dinner.I always have a homemade vinaigrette kicking around. My favourites is: 1 part acid (lemon juice, apple cider vinegar, rice wine vinegar), 3 parts oil (always extra virgin olive oil), Dijon mustard, maple syrup (or honey), salt and pepper. Here are some recipes that I’ve discovered that don’t require a lot of fussing around and is easily shareable if you have several extra mouths to feed:Peach Caprese Salad, Mexican Corn Salad, Grilled Pork Should Steak (you can use flank steak too), Orzo Salad (I add parmesan, Swiss chard and red peppers as well)
- Two weeks ago, I was admiring my vegetable garden and dreaming of tomato salads, grilled eggplants and kale smoothies. Dave and I went way for a few days and came back to mostly stems. Some little critter created their own veggie salad buffet. Do any of you have tips on how to keep the critters away without breaking the law?
Things are slowly starting to get better and it’s encouraging to know that our collective efforts over the past few months are paying off. While we’re not out of the woods yet, we are seeing progress.
As things continue to improve, you might have some questions about the local real estate market. Are homes selling? Where are prices right now? What’s the selling process given the restrictions still in place? How are people shopping for new homes?
When you have questions, please feel free to reach out to me. I’m happy to help.