The Bibby Group | April 2020 Market Update
Predictably, real estate sales have suffered over the last month, as COVID-19 has triggered an economic slowdown and spike in unemployment. During this period, I have been tracking the number of weekly transactions in the central condominium market. Active weeks have usually seen between 150 and 200 transactions (sales), while there has been a gradual decline over the last six weeks, with 21 transactions over this past week. So our transaction volume is easily down approximately 85–90%. This drop is no surprise, as many agents and buyers are staying home and avoiding in-person interactions. A small pool of buyers who need to make purchases is circulating, nonetheless. And as more positive news comes out, this buyer pool will likely increase.
With limited transactions being conducted, the market is effectively at a standstill until we are in a better position to do business in a new manner. Premier Ford recently announced a framework to gradually reopen the economy—news which has prompted some optimism. I suspect some spring sellers who have not listed will postpone or wait until an opening emerges, which will keep inventory levels low for the foreseeable future. What we need to determine, however, is how business will actually be conducted when the time is appropriate. I anticipate that, like many industries, there will be an adjustment period for the real estate industry. New protocols will be put in place, and we will adapt. I remain optimistic that buyers will eventually feel confident and comfortable resuming their searches, with masks and gloves becoming part of the process.
Virtual will likely be the operative word for the foreseeable future. Fortunately, the level of interest I have seen online in terms of page clicks and video views has never been higher throughout my entire career. People are thinking about real estate, and the virtual experience will enhance the future of sales, with buyers reviewing floor plans and doing online tours to qualify themselves before actually visiting properties. This approach would also make buyers more informed and better qualified. Although this may not prove to be as effective initially as in-person viewings, we will do our part to prevail, perfect the experience, and stimulate interest.
On the plus side, interest rates remain low, which should help buyers contend with the downtown market’s ongoing affordability issues. Low rates will allow more people—particularly those whose employment or finances have not been impacted by COVID-19—to enter the market when the timing is appropriate. In fact, for the first time in the last six weeks, we have seen a slight upward trend in showings, as the buyers who need to transact and perhaps sold before the pandemic are emerging and conducting themselves as responsibly as they can (basic protective equipment) to view properties. Some pent-up demand will emerge when the timing is right.
Many clients have asked for predictions regarding the future of real estate—specifically downtown—and I would say an adjustment is inevitable. Jobs have been lost, incomes will be impacted, and banks will have higher credit risks. In addition, investment properties may not be as attainable or attractive to common investors, who have had smooth sailing for well over a decade. There will be some opportunities for buyers, while sellers who transact in this market will have to be patient, defend their prices, and negotiate the best possible terms, including a sizable deposit. The transaction process will not be as seamless as in years past, but I remain optimistic that eventually there will be some progress.
As the exit path from COVID-19 appears to be uncertain at the moment, we have to remain positive that an opening will emerge and be patient for consumer confidence to increase. There is no question that the Toronto real estate market will experience a gradual reawakening. For the time being, however, the sales process will take slightly longer until we get out of this freeze. We will just need to adjust to a new way of conducting business—one where everyone feels safe and adopts responsible practices.
The Bibby Group