For the Toronto-area real estate industry, the beginning of 2020 was shaping up to be a record-setting year.
And then the pandemic happened.
According to the Toronto Regional Real Estate Board’s new Real Estate Market Economic Recovery Initiatives document, which will be released next week, real estate sales in the Greater Toronto Area (GTA) dropped 67.1% in April this year compared to the same time last year and was down by 53.7% this May compared to May 2019, but prices have remained relatively stable because the number of listings has dropped in unison with the number of buyers.
The average selling price for a Toronto detached home in April this year was $1,249,730 — a 7.9% drop since April 2019.
Also, month-over-month sales figures suggest improving conditions, with May 2020 sales up 55.2% over April 2020 sales and June sales following a similar trajectory, said TRREB. (The guide will be updated with June numbers next week.)
“While COVID-19 has temporarily impacted home sales and listings in the GTA, home buying intentions have remained quite stable, suggesting that many people will be looking to satisfy pent-up demand for ownership housing once the recovery starts to take home,” according to the document.
“The supply of listings, which was a concern before the pandemic shut-downs began, will continue to be an issue as the economy and housing market recovers.”
The real estate board expects consumer confidence will improve as people gradually go back to work. A growing number of people will look to take advantage of current very low borrowing costs to buy a home, it said.
But this is all based on uncertain factors such as continued success in containing the spread of COVID-19 and generally improving economic conditions and unemployment. But if, for instance, a second wave came along, “a more aggressive approach to government stimulus may be needed.”
TRREB is recommending that policy-makers need to address the lack of a diverse housing supply in the GTA to ensure affordability and “it should once again be top-of-mind once the recovery takes hold.”
For the city, this could mean a deferral of the municipal land transfer tax or property taxes and streamlining zoning approvals.
At the provincial level, also consider a land transfer tax deferral and adjust first-time buyer rebate to reflect current average prices and adjustments of tax rate brackets so that higher rates are not imposed on below average-priced properties.
The board also suggests the province expedite hearings to help optimize the supply of rental housing.
The federal government could consider adjusting the mortgage stress test to allow for greater flexibility and allow 30-year amortizations for insured mortgages.
The feds could also consider various options for flexibility for the RRSP Home Buyers’ Plan, including increasing withdrawal limits, expanding first-time home buyer eligibility and allowing cross-generation use, such as parents using RRSP funds to help their kids with a home purchase.
Meanwhile, Ontario Real Estate Association president Sean Morrison says open houses still remain prohibited at this time and the association is recommending realtors stay with stage one protocols for re-opening, which is physical distancing, wearing personal protective equipment during all showings, limiting numbers at showings and sanitizing between showings and have COVID-19 questionnaires ready to make sure no one in contact has travelled outside the province.
“There were a lot of digital tools we used sporadically that we became dependent on,” said Morrison.
“Things like video conferencing with clients, sign documents by an electronic means and email offers back and forth. That became the norm over the past three months. The key piece for us will be the re-opening of sales offices.”