Toronto is one of the largest cities in Canada. More than 6 million people call it home. It’s filled with opportunity and excitement around every corner. With a metropolis like that, it’s easy to see why people love it and why Toronto is the top choice for most people as the place they’re most likely to move to.
What is the real estate market currently like in Toronto, Canada? Is the market open for buyers? Does it rank low for sellers? Can investors get their money’s worth from the condominiums that fill the city horizons? Do the majority of residents live in the city or out in the suburbs? These are just some of the questions that need to be answered when it comes to the current real estate market of Toronto. For more specific inquiries regarding houses, rentals, and AirBnbs, check out such sites as owntheaddress.com. Toronto has many real estate agents and agencies that are registered with the government to provide the most accurate listings for any houses, rentals, and investment opportunities. It just takes one search to find what you need or are looking for in a home.
The Market And Covid
The world is in a state of flux due to the Covid 19 pandemic. Nothing is as it was, nor is anything as it should be. This includes the real estate market in Toronto, Canada. Past statistics are no longer valid for the past year and may be invalid for the next year. The only truth and numbers that can be counted are those that are happening now. So, as far as real estate goes, what is the current state of Toronto?
With the onset of Covid 19, the real estate market in Toronto has totally shifted from where it was before. It has been derailed from its present pattern into one of unpredictability. There have been fluctuations in value, property types, shifts on market days, and price points. Because of the lockdown, the real estate market has become “frozen” and the government has introduced a kind of financial assistance program to Toronto residents who are in need. This allowed lenders to offer deferrals on mortgages for up to six months.
Now the market is working in a restricted vacuum which is helping to prevent a negative shift from happening. However, due to the instability of the behavioral choices and decisions made by many homeowners, the seasonal buying and selling of real estate is still up in the air. Usually the fall season is precarious enough. Add on to it the issue of Covid, and buyers are grabbing at incredibly low offers, sellers are abandoning their forgone properties, and turn-key properties are being snatched up every day. There doesn’t seem to be any rhyme or reason for such an outcome, but there is. It’s called fear of Covid.
Movement Out of the City
With the pandemic in effect, many real estate agents have noticed that many Toronto residents are moving out of the city zones and into cottages and homes in the outer suburbs. The reason is to seek better living conditions while they work from home, teach their children, and assist their aging parents in an environment far from the virus.
Sales went up more than 40% for homes that were distanced from Toronto by at least 50 miles away. For most real estate professionals, this may indicate a behavioral change can impact the market for the upcoming years. Although the real question is whether this behavior modification will stay in place once employees have to return to work. Is it possible that another rise is on the horizon when people prefer not to drive so far to get to their jobs?
Also, with the Toronto residents needing to downsize and deleverage their mortgages due to personal finances, living farther away in a less expensive accommodation may become a more permanent decision.
Rent Is Decreasing
Before the Covid situation even began, rent prices on condominiums were already declining. This was because more condo units were being finished and were adding to the number of places to live. Rents dropped down to 15% lower rates than the last year for most of the expensive downtown area properties.
Another added bonus for renters were the new stricter regulations for Airbnb kinds of rentals. This led to more units being available for renters who needed or wanted long-term lodging.
With the onset of the pandemic, the supply for rentals increased, because the demand decreased. Non-permanent residents, immigration, and tourism lessened, thereby opening rental units for a more permanent option. While the Covid restrictions are in place, many people have been warned not to fly or travel outside their homes or countries. This has changed the real estate market tremendously.
It’s interesting that not only has the condominium market changed, but many of the actual high-rise buildings which are outdated from the last 20 years are in need of a refreshing. Generally, these units are owned by investors and they are used for short term leases. As the pandemic hit, most of these rentals become vacant. Even the longer-term renters began to move, even if it were to relocate to a smaller, less expensive rent a few floors higher. This led for the investors to reevaluate their buildings to promote for more tenants. The fact that these investors are already dealing with a negative cash flow, their outcome is extremely controversial. And should the prices dive even deeper, will buyers continue to work with a negative equity and be able to escape in default knowing their mortgages are protected?
With rentals being in such high demand, for someone interested in Toronto real estate, there may be a bit of confusion as to what a short-term rental actually is as compared to a normal year for year-based rent.
A rental that is considered short term means that the unit is generally rented for less than a month’s time. This includes B&Bs but not motels or hotels. To properly rent such a residence, most people need to use a short rental agency. These are companies that specialize in taking reservations online, receiving payments, and brokering any short-term lease. Any agency that works with the short-term charter requires a license which is procured through the Toronto government.
Short-term operators are those people who rent out their homes on for a shorter period of them. They too must register with the city of Toronto, so their information is listed with the Toronto real estate market.
The Price Of Debt
Many people are in debt, and this includes residents of Toronto, Canada. Businesses are in debt, households are in debt, even the government is in debt. This happened even before the pandemic popped up. Because household debt in Canada has been climbing at astronomical rates, they have reached the highest debt-to-income ratio in history. Before the Covid virus hit, the residents of Toronto were already having difficulty paying the high mortgage rates in the midst of their interest rates rising too. This could have played a major factor in the downfall in the real estate market.
With that in mind, all this debt is a major crisis for a more vulnerable market. It’s a valid concern that many homeowners will not be able to pay their mortgages if the financial crisis goes on. Too many families are stretched too thin with their finances. What happens when there is no more income and no more governmental aid? The real estate market will change drastically. A recovery may not occur for years after.
Toronto is the place where it seems that everyone wants to move, and why wouldn’t it be? It’s a great metropolis with fabulous restaurants, up-and-coming businesses, spiraling skyscrapers, and the soaring CN Tower in the background. Add beautiful green trails, a magnanimous zoo, and lots of sport facilities and your home is now fit for a king, or a queen. The capital of Ontario is easily one of the best cities to live in.
However, with the onset of the pandemic, Toronto real estate has been up and down all year long. Though most real estate agents can predict how the market will generally move over the course of a year or two, this year has ruined all those statistics and algorithms. There is no basis for which to generate any hypothesis. No one has any idea of the depth and complexity of how the Covid pandemic currently affects the average household or business, or even how it’s changing the real estate market. Things are just too unpredictable, especially while there’s still no end in sight. To bring the real estate market back to its former state, certain factors will have to transform, rules and regulations will have to be amended, and the crisis will have to end.
What is the current state of the real estate market in Toronto? Essentially, it’s in a flux. There are both positive and negative aspects to what’s going on. While the world waits for the crisis to be over, the real estate market anxiously awaits too.