In December 2019, Sarah McCullen purchased an asset in the GTA through Condo Mapper. She thought she had made an irresistible offer. By February 2020, many investors are struggling to close similar deals in Toronto real estate as more competitors are also trying to woo sellers with their juicy offers.
Who would have predicted this surge in the demand for Toronto’s real estate during the lockdown? TRREB stats for February 2020 indicate a 45% increase in real estate transactions compared to stats from February, last year. Over the last couple of months, the rise in Toronto’s real estate market has continued to peak. Toronto’s real estate market seems to have insulated itself against the adverse effect. We seek to find an explanation for this remarkable feat.
One major reason for spikes in GTA house sales during the pandemic is linked to the fact that many buyers pre-qualified for business by December 2019. It was only normal to expect deals to be completed in the coming months.
This means people who were looking to buy bigger houses had already sold their homes. The GTA is also favored by Canadian immigration laws and interventions. Many Canadian immigrants would prefer to live within or around the GTA due to lots of ongoing projects and business activities in the area. Building more homes requires more labor that many are willing to provide. These factors together created a huge demand for homes in the GTA.
Another reason- real estate activity can continue in Toronto with the widespread use of technology, despite the lockdown is widespread. Before the lockdown in March, many realtors were already using e-tour technologies. Clients don’t need to be physically present on the apartment’s premises before they get a vivid look at what property they are purchasing. Hence, e-tour also helped many buyers close real estate deals within the first quarter of 2020. Now that social distancing rules are being upheld everywhere, Toronto will continue to leverage the e-tour technology to ensure the real estate business continues.
A third remarkable factor that experts have pointed is favorable economic policy. As the economic impacts of COVID-19 began to take its toll on the global market, the BoC took bold steps to help keep businesses and the real estate market healthy.
In February 2020, the Canadian government made specific changes in the real estate market, which includes the reduction of mortgage rates. Tenants were also given a more flexible time frame to pay rents. The BoC also reduced interest rates to 1.25% in the following month. Reduction in demand for oil and the consequent fall of oil prices had quite an impact on the value of the Canadian dollar to the U.S dollar. With the BoC’s economic recovery plan amidst weakened Canadian dollar value to the US dollar, lots of foreign investments were attracted by Canada. The Canadian real estate sector got a good share of foreign investments. Now, there is a higher demand for properties in the GTA than supplies.
Condo Mapper is following Toronto’s real estate closely. The upcoming months will test whether the surge in the demand for Toronto’s real estate will be sustained for long. It is still uncertain if the economic impacts of the COVID-19 pandemic will still hit Toronto’s real estate market hard. However, investors can take solace in the fact that when other real estate markets are yet struggling, Toronto has found a way to triumph despite these trying times.