Market activity during coronavirus pandemic
With measures such as social distancing and non-essential business closures, home searching may slow down to a degree as more people take precautions and follow social distancing bylaws.
This does not mean that the market will come to a complete halt. Despite these challenges, there will always be a need to purchase or sell a home, such as those experiencing divorce, are in the middle of an estate sale, and other circumstances. There are important reasons why the real estate industry will continue to operate and support the Toronto market.
A potential slowdown of bidding wars
New immigrants and family formations have contributed to rising housing demand in Toronto. Supply and demand play an important role in the state of real estate markets. Low inventories and a shortage of listings in the city often spur bidding wars between homebuyers. This can make it more difficult for buyers to enter the market, as competing offers are a common occurrence due to tight market conditions.
From the Canadian Real Estate Association
- National home sales fell 14.3% on a month-over-month (m-o-m) basis in March.
- Actual (not seasonally adjusted) activity was up 7.8% year-over-year (y-o-y).
- The number of newly listed properties dropped 12.5% m-o-m.
- The MLS® Home Price Index (HPI) advanced by 0.8% m-o-m and 6.9% y-o-y.
- The actual (not seasonally adjusted) national average sale price climbed 12.5% y-o-y.
Both real estate agents and moving sales reps are using; online 360-degree virtual listings, panoramic images and floor plans to communicate with customers without being there in person. Apps and video calling services help maintain open lines of communication.
As a result of the coronavirus pandemic, the Bank of Canada has reduced its benchmark interest rate to 0.25 per cent from 1.25 per cent. This is the lowest the rate has ever been.
The good news is that this could be the perfect time to enter the market and purchase a home. Now that mortgage rates are lower, buyers can borrow more money at a decreased interest rate making their mortgage payments more affordable.
Canadian Real Estate Association
Bank of Canada