PPS Realty assesses COVID-19’s impact on the Toronto real estate market
“COVID-19 has put the global economy in turmoil since its first appearance in Wuhan, China during November 2019. Here in Canada, and specifically Toronto, we’ve had different responses from the GTHA real estate market,” says Ali Salarian, Real Estate Analyst and vice president of Woodbridge, Ont.-based PPS Realty Brokerage. “TRREB stats showed a 45 per cent increase in sales transactions and a 16.7 per cent increase in price in Feb. 2020 compared to the same period last year, blaming the lack of listings inventories in the market, which was as a result of the outdated stress test rule that was implemented in 2018. The federal government stepped in on February 18, 2020, and changed the new mortgage rules in a bid to boost the supplies in the market. However, the BoC decided to cut the interest rate to 1.25 per cent on March 4th following to its 2020 economic outlook.
Oil prices dropped later on due to the low demand for crude oil by China and the unreasonable decisions of some oil producers to supply the war. Eventually, the Canadian dollar has weakened in value against the U.S. dollar, right after the BoC monetary policy moved to further cut interest rate to 0.75 per cent on March 13 in a bid to boost the economy accordingly. This resulted in more cashflow into the Canadian market from overseas, as well as encouraging local buyers to invest in real estate with a low-interest record rate.
As the World Health Organization escalated the case to a pandemic level in recent weeks, Canada has taken appropriate measures to flatten the curve of this virus outbreak through social distancing and self-quarantine. In such economic conditions, demand will fly to basic necessities, and homebuyers will prefer to stay home while sellers try to sell quickly to avoid possible recession and get maximum profit from their sales. [it remains to be seen if] this is enough to reduce the number of multiple offers and have a normal price growth on COVID-19 Term.”