By ADRIENNE N ANNETT
According to recent reports from the Toronto Regional Real Estate Board, Greater Toronto Area realtors reported 2,975 residential transactions through TRREB’s MLS System. This result was down by 67 per cent compared to April 2019.
What does this mean? Based on this assessment it would appear that COVID-19 has caused the sky to fall on the real estate market. The headlines in the news paint a scary picture. 'Real estate sales plunge!'
After recently receiving calls from several buyers looking for hot deals due to sellers possibly having to cut prices amid this pandemic it has
become apparent that this narrative of a real estate 'plunge' during the COVID-19 pandemic may be sending the wrong signals to potential
buyers and homeowners in the GTA.
The market has absolutely slowed down in comparison to most of the first quarter of 2020. Social distancing, the directive to stay home, fear
of the virus and the economic strain have taken a toll on the number of residential transactions. Many sellers are opting not to list in this market because of this slow down, thereby, adding to the slow down. They are concerned about not receiving a fair price for their property because
there are fewer buyers in the market. And a big concern of sellers, especially ones who are living in their homes or have tenants in investment properties, is how to keep their homes free of contamination when buyers are coming in and out.
All of these are valid concerns, but the reduction in residential real estate sales does not equal to a reduction in price or value.
As a buyer I would not expect house prices in Toronto to be slashed by 50/60 per cent. There is currently no tangible reason for this. We have
seen negative effects on the market during this pandemic, but there has not been a total halt on trade in real estate. Traditional methods such as open houses have been completely halted. More virtual options such as tours, 3D home viewing and electronic signing have become helpful for buyers and sellers to facilitate property sales. And it is still possible to visit many properties currently listed as long as the sellers/tenants permit
and the buyers and their representatives are willing to declare that they have no symptoms of the virus and have not been travelling recently.
But does this mean there are no hot deals? Not exactly. There are some sellers willing to sell for a little less in this slow market. Some pre-construction builds are extending or adding promotional deals to encourage buyers. There are also fewer buyers in market which means less competition, and this is truly amazing if you have ever had to place an offer on a property with 15+ offers!
Of course, one of the biggest deals in purchasing a property is having a low interest rate. Currently, the rates are remarkably low. The Bank of Canada has taken clear action in response to COVID-19 to provide a boost to the economy by significantly reducing the benchmark interest rate. Most lenders have as a result reduced their mortgage interest rates.
As well, many lenders have offered options for mortgage deferral to help owners who may have lost employment or have had a reduction in income to not be in a position where they are forced to sell or even lose their homes. Even for owners not intending to sell, perhaps this is a time to consider refinancing. With a lower interest rate your savings could be huge!
Basically, aside from the difficulties of limited access to properties and low inventory, if you are looking for savings, this is a pretty good time to buy.
No one is certain what the numbers will show for the coming months as our country begins to slowly reopen. It is important that, as a seller, you are not guided by fear if you must sell now. And as a buyer, it is not necessary to give up your dream of home ownership because of your fear of the future. Get advice from a professional on how best to move forward. Realtors have been instructed to ensure the health and safety of their clients and all parties involved in any real estate transaction during this period. And, moving forward, this will be the basic standard of care in addition to providing options for the best course of action in the real estate investments of our clients.
May God Bless all of us who have been affected by this pandemic and guide us through these extraordinary times.