COVID-19 kept Greater Toronto Area homebuyers at bay in April as sales plummeted.
Although they’ve been deemed an essential service, realtors have been forced to get creative with technology to serve clients during the lockdown.
The Toronto Regional Real Estate Board (TRREB) says 2,975 homes changed hands for the month, which is 67 per cent fewer than April 2019 figures. Listings fell 64.1 per cent year-over-year.
“Homebuyers and sellers are acting cautiously and being advised not to proceed with selling or buying unless they absolutely need to,” John Lusink, president and broker of record of Right at Home Realty, told Yahoo Finance Canada.
“A near standstill in open houses and showings has resulted in a significant slowdown in sales activity.”
TRREB says the average price of a home went up 0.1 per cent to $821,392 compared to April 2019.
Lusink expects prices to hold steady if the fight against COVID-19 goes well.
“In the GTA, particularly the City of Toronto, core market fundamentals remain in place and we expect constrained housing supply and sustained demand to keep prices stable in the region in the immediate term,” he said.
“Provided social distancing measures ease before the end of the summer, we expect a very busy fall market.”
During the months prior to the lockdown, Toronto prices were rising sharply.
Where prices go from here
Although the average home price ticked up slightly year-over-year, it fell 11.8 percent to $789,274 from March on a seasonally adjusted basis.
Hilliard MacBeth, a financial advisor and author of When the Bubble Bursts: Surviving the Canadian Real Estate Crash, Second Edition 2018, has been calling for a crash for years. He says the next move is lower.
“Although the TRREB might not agree, I suspect that the peak of prices in Toronto was April 2017,” he told Yahoo Finance Canada.
“Now, as we are in a severe recession, we will see accelerated prices move down, as there are always people who need to sell, but nobody really needs to buy.”
Mortgage providers are allowing customers to defer payments for up to 6 months, but MacBeth says that won’t be enough if a recession drags on.
He has long called debt the canary in the coal mine for the housing market. He says huge levels of borrowing by speculators will come back to haunt them as they struggle to service debt as prices fall and jobs are lost.
“The option of selling the property to repay the debt has been removed by the lack of sales. So the lenders will take over control through foreclosure of many properties and they will decide what to do,” MacBeth said.
He added that one possible scenario in the case of a long recession includes lenders flooding the market, causing prices to plunge.
Rent falling...for those who can actually pay
Although there have been a number of COVID-19 relief benefits like CERB, renters haven’t received direct relief.
While rent remains unaffordable for many in the city, TREBB says it has come down slightly. The average one-bedroom rent was $2,107, down 2.7 per cent compared to April 2019. A two-bedroom unit was $2,705, down 4.1 per cent.
Far fewer people moved in, as transactions fell 57.9 per cent
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.