Will the Prices of Houses in Toronto Drop In 2020?

It seemed like just a few months ago Toronto real estate was roaring, with year-over-year price increases and an active spring home-buying market. Yet, as the seasons change, the course of our lives follows suit due to the COVID-19 pandemic. From self-quarantining to social distancing measures, there is a lot of uncertainty at the moment.

Many popular summer events in the city have been cancelled, and experts predict that the coronavirus measures will last in Canada until at least July. This is expected until the number of cases is reduced and the pandemic is deemed “under control.”

If we look forward to the next few months, we can speculate about how the Toronto housing market will be affected and if real estate prices in this city will significantly drop come summertime.

Economists Predict Toronto House Prices Could Fall In July 2020

Current market activity may appear to have slowed. Early April saw average home prices in Toronto decrease by 1.5% and some economists predict that by July, home prices could fall by 5 per cent.

Yet, we cannot be sure that this trend will continue into the summer and that prices will necessarily drop further. The Toronto Regional Real Estate Board (TRREB) notes that the pause on activity will lead to more demand once measures loosen. As a result of banned open houses, homebuyers have resorted to creative ways of viewing listings and engaging with the market, leveraging technology to facilitate the home-buying process while mitigating the impact of coronavirus on real estate activity in Toronto.

Social distancing will likely continue for at least a portion of the summer. Yet, we expect buyers who have been waiting patiently to continue their home search will quickly re-enter the market when we return to some normalcy. Meanwhile, some sellers will take a wait-and-see approach and may not need to reduce their home sale prices or make concessions.

Yet, when the market recovers, buyers are likely to find the same shortage of listings and inventory that existed before the coronavirus outbreak, further contributing to increased demand and high prices in the city.

Pace of Economic Recovery Will Affect Toronto Real Estate Growth Rate

The state of the economy and unemployment rates will play a role in the amount of financial power people have to make a home purchase. The government has put a number of COVID-19 relief measures in place to help Canadians during this time. The extra financial assistance will certainly help Canadians, and it may even encourage real estate activity for those who need to buy or sell at this time.

The timing of the market recovery will affect any real estate price drops this summer. Those who are concerned about their employment in the coming months could pull demand down. However, those who have stable employment and cash that isn’t tied up in investments can take advantage of low interest rates.

First-time home buyers can take advantage of market conditions.

First-time homebuyers can leverage current market conditions, since they don’t have equity tied up in a previous home. First-time buyers who qualify can also use the First-Time Homebuyer Incentive to help with their purchase.

Since market activity has slowed, those who are willing to brave current market conditions and leverage technology can use the decrease in market competition to negotiate a better home sale price. Sellers who are keen on selling during this time, may be more flexible and open to negotiation.

Low Interest Rates Attract House Buyers to Toronto

The mortgage stress test has made purchasing a home challenging for some. First-time homebuyers have especially faced difficulty in qualifying for affordable mortgages.

Bank of Canada changes benchmark rate to 0.25%

However, the Bank of Canada has made changes to their benchmark rate and lowered the interest rate to 0.25% – the lowest it’s ever been. Before March, the rate was sitting at 1.75%. If buyers decide that they want to take advantage of lower rates, this could motivate them to purchase homes during this time.

This could be the break homebuyers need, widening their budget, housing options and features. For example, if they always wanted a home with four bedrooms or a larger backyard, lower interest rates may allow them to afford those additional features.

Canadian home buyers can save by leveraging low interest rates.

For many Canadians, there are decisions that need to be made about whether it’s the right time to purchase a home or not. If you’re in a position to leverage low interest rates and are willing to use technology, then you can get savings by making a purchase during this time. However, people should consider their safety first and depending on your current employment situation, it could make sense to wait.

More to Explore

5 Things To Do To Prep Your Backyard for Spring and Summer

March 27, 2024

Spring Checklist for Homeowners

Spring Checklist for Homeowners

March 26, 2024

RE/MAX Awards header

About the RE/MAX Awards and Recognition Program

March 25, 2024

Real estate

Real Estate Definition: Title Search

March 25, 2024

moving with pets

RE/MAX and Pet Valu Team Up to Make Moving with Pets Easier

March 25, 2024

8 Easy Outdoor Home Improvements to Consider This Spring

March 23, 2024

Assignment Sale

Real Estate Definition: Assignment Sale

March 22, 2024

How to Move With Pets

How to Move With Pets: A Complete Guide

March 22, 2024

Famous movie houses_REMAX Reviews

RE/MAX Reviews: Famous Movie Houses

March 21, 2024

Find the
Right Agent

Sign up
For Our Newsletter

Hidden

Next Steps: Sync an Email Add-On

To get the most out of your form, we suggest that you sync this form with an email add-on. To learn more about your email add-on options, visit the following page (https://www.gravityforms.com/the-8-best-email-plugins-for-wordpress-in-2020/). Important: Delete this tip before you publish the form.
Untitled(Required)

*RE/MAX, LLC, 5075 S. Syracuse St., Denver CO, 80237; RE/MAX Western Canada and RE/MAX Ontario-Atlantic, 639 Queen Street West, Toronto, ON M5V 2B7, 905-542-2400