Toronto home prices could fall by 0.5 percent by the end of the year if strict social distancing measures and widespread business shutdowns continue until late summer as the region battles the COVID-19 pandemic.
According to Royal LePage’s newly released Canadian housing market report for the first quarter, the aggregate price of a Toronto home would fall to $844,200 in this scenario.
In a rosier scenario also explored by the brokerage, the aggregate Toronto home price would increase by 1.5 percent by the end of the year to $861,100 if business activity resumed by the end of the second quarter.
While both these scenarios are far from guaranteed, the only certainty is that Toronto housing demand and home prices were heading into the spring season full steam ahead until the COVID-19 pandemic stopped them in their tracks.
“Toronto real estate appreciated rapidly in the first quarter as the demand that began in the second half of 2019 kept its momentum while inventory remained low,” said Kevin Somers, chief operating officer, Royal LePage Real Estate Services Limited, in a media release.
“However, by mid-March both buyers and sellers had pulled back to adhere to social distancing measures and gauge the impact of the pandemic on the market,” he continued.
Despite the mid-March pullback, the aggregate Toronto home price increased by 7.5 percent to $866,211 on a year-over-year basis in the first quarter. Condos saw the highest price appreciation, hitting a median price of $580,508 in the GTA in the first quarter. Meantime, two-storey home prices rose to $1,010,004, a 7.7 percent increase.
There’s no doubt that the Toronto housing market’s resilience will be challenged during these unprecedented times, but an expert consensus has emerged that the region is well-equipped to weather the storm without sustaining too much long-term damage.
In commentary published last week, RBC Senior Economist Robert Hogue said that demand will certainly be diminished throughout the crisis and prices will waver as a result. However, it is unlikely that Toronto home prices will collapse as a result of the pandemic’s impacts.
“We expect [Toronto home] price support to wear down in the weeks ahead. Still, we see a low risk of a collapse at this point,” he said.
“We believe the extraordinary policy response from all levels of government and the Bank of Canada, as well as accommodating measures offered by financial institutions will soften the blow.”
