COVID19 V/S TORONTO REAL ESTATE: WHO WILL WIN?

Coronavirus (COVID19) has grown substantially to become a pandemic and almost every country in the world is fighting with the problem. The sad part is that until now no definite cure or medication has been discovered, thus making it difficult for the various world bodies to overcome the crisis. It is having a huge impact on the world economy. Social distancing and quarantine have led to workplace lockdowns and forced each and every individual to stay indoors and just wait for the pandemic spread to vanish. As per the senior world economists, the economic recession that will follow the threatening disease is expected to be mightier than the Great Economic Depression of 2008. The Toronto Real Estate is no stranger to the devastating effect of coronavirus on the economic growth. There has been a noticeable decline in the real estate transactions, owing to the lockdown situation. Here in this article, we throw light on the current real estate market situation, market condition within a short time gap from the pandemic and then the long term market situation when COVID19 will be long forgone.

Firstly, we discuss about the negative impact of coronavirus on Toronto Real Estate. As we are aware that that the governments all over the world are strongly advising to stay indoors in order to avoid contamination and spread of the virus, it has created a huge void in the Toronto Real Estate market. No buyers are ready to visit the property sites. Moreover, the sellers too are reluctant to have estate agents or buyers at their place for showings as this might lead to the spread of virus. As a result of this, nearly 7% less sellers and approximately 11% less buyers are present in the market currently. Due to this, Real estate sales have taken a dip currently.

In order to cater to this bleak situation, the Toronto Real Estate Agents have come up with a brilliant idea of Virtual Open Houses & Virtual Shwoings. Herein, the buyer does not have to visit the property physically. Rather, he/she is provided with an online 3D platform to get a proper glimpse of the particular property including all its whereabouts, exact structural design and area. This technique is expected to be a game changer in the real estate sector, especially during such time of market uncertainties. Toronto’s real estate agents have a highly positive outlook towards the impact of this digital way of property viewing on the market conditions.

Moving forward, when we discuss about the various kinds of buyers/sellers in the real estate market, we can broadly bifurcate them into 3 categories.

The first section comprises of individuals who have to buy a property anyhow; the reason being either they have already sold their previous house, or they are too keen to move out from rented premises and shift into a permanent residence. The second fragment comprises of individuals who ought to sell their property due to any personal reasons, for instance economic crisis. They might want to sell the existing property and shift into a smaller house, thus utilizing the surplus money they get upon downgrading. They might require that money to be spent on whatsoever personal needs or demands. The third and the final segment comprises of individuals who are always on a lookout for a decent and favorable deal and upgrade their standards of living smartly. They ought to be in search of such catchy deals all the time and it doesn’t matter to them how adverse the situation is. All in all, each section of individual discussed above is on a hunt to get into a real estate transaction. They seem to have a little effect from the Corona Virus, effect on the market condition.

Above discussed scenario of the 3 segments gives us a sneak peak into the present market scenario in The Toronto Real Estate when the pandemic threat is still prevailing. Moving ahead from the present scene, the next discussion will be about the market situation immediately after the coronavirus vanishes. That will be a period of instability and nervousness. Lets discuss about that grim time interval. When we focus on that time immediately after the pandemic ends, there are quite a few points that strongly support the viewpoint of market rise. The major reasons for such optimistic approach as enumerated below:

1. Financial institutions have reduced interest rates on mortgages, owing to the economic turmoil happened because of the serious health scare that is affecting the whole world currently. The reduced lending rates are expected to be the same until sometime after the crisis situation perishes. as a result, majority of buyers who plan to buy a property on mortgage would definitely see this as a great opportunity to go ahead and make the transaction.
2. Although the pandemic would get over, but some buyers would be reluctant to enter the market immediately as a preventive measure, in case the pandemic makes a comeback. This ensures that the number of prospective buyers will be low. This fact directs to the point that there will be more buying options for the buyers, as opposed to the earlier market situation wherein the buyers had limited options due to the larger number of buyers and limited properties on display. More buying options signifies that the buyer is more likely to get convinced to purchase any of the options, depending upon as to which option fits perfectly in terms of his budget and choice of needs that he was looking for in the property.
3. Construction and renovation works have been on a complete halt since the COVID19 outbreak initiated. As soon as the authorities give green signal to resume the work, the stuck projects will be completed at a much faster pace, hence providing newer and more buying options to the prospective buyers.
4. The property prices will be moderate immediately after the pandemic ends. This is mainly because of a lesser number of buyers in the beginning. Also, the economic downfall due to the virus outbreak is a major driving force to lower property evaluations. It will surely take some time for the prices to rise again. As a result, the Early Mover advantage is highly predicted for the daring initial customers immediately after the situation gets back to normal.

As listed above, the Toronto Real Estate Market is expected to rise, though marginally, in the time frame immediately after the virus threat is vanished.

In the long run, i.e. after a substantial time from the end of the virus situation, the markets are expected to be at the same stage at which they were just before the COVID19 situation begun. So in the long run, market scenario is expected to be at the same height at which it used to be before the outbreak. The conclusion part is that Coronavirus has led to a slight fall in the Toronto Real Estate graph initially, but the facts and viewpoints suggest that it cannot have an everlasting impact on the market situation. Hence, as per a famous saying, “Gloomy dark night will definitely be followed by a bright beautiful morning”

Note: This articles is based on author’s personal views, no advise should be taken from it.

Author – Vinod Bansal (SRES, Broker)

Coronavirus (COVID19) has grown substantially to become a pandemic and almost every country in the world is fighting with the problem. The sad part is that until now no definite cure or medication has been discovered, thus making it difficult for the various world bodies to overcome the crisis. It is having a huge impact…