With 2020 drawing to a close, there are many hopeful indicators that the new year could bring us closer to pre-pandemic times again.
To date, at least three major pharmaceutical companies have released promising vaccine trial results that could set Canada on a course for large-scale distribution as early as spring 2021. In the United Kingdom, one COVID-19 vaccine has already been approved and will be rolled out this month.
For Toronto’s housing market, this news offers an optimistic path to normalcy after a year of unconventional market patterns, economic anxiety and a struggling rental market.
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Despite the economic unpredictability that the COVID-19 pandemic has created, Simon S. Mass, CEO of The Condo Store Group of Companies (TCS), explains that market downturns of all sizes have historically been opportune times to invest in real estate if the buyer’s personal circumstances permit it. Nationally, Canada’s housing market has remained on an upward trajectory following the spring lockdown, reporting a 32.1 percent increase in annual sales according to the latest October data from the Canadian Real Estate Association (CREA).
“The long-term goals remain the same, and if interest rates and others factors result in you getting better terms and more value for your dollar today, then that sounds like a good strategy and a good time to invest,” he explains.
Upon analyzing consumer confidence data, Mass and his team have found that many are expecting a return to ‘normal’ in some capacity by the summer of 2021. While that’s still a ways off, Mass says that the end of 2020 is proving to be a historic time to invest in real estate for TCS’s clients — record-low interest rates, the expected increase in immigration, and a lack of confidence in other market areas offer favourable conditions for investment at present.
“While we are excited for what the new normal will be, we cannot lose focus on what is available now to invest in so that we can maximize the future wealth of our clients,” said Mass.
With multiple vaccines on the horizon, Mass points to a couple of key trends real estate investors and end users could see in the near future.
Low-rise suburban housing markets will experience high volumes even after a vaccine is widely available, but will eventually stabilize and fall back to normal trajectories and cycles, he explains. The single-family housing segment has seen remarkable sales growth throughout the pandemic, even in new construction. New single-family home sales rose 44 percent year-over-year in the Greater Toronto Area, according to October figures from the Building Industry and Land Development Association (BILD), with sales concentrated in suburban GTA communities like Durham and York region.
Mass says that the “urban exodus” that’s seen city dwellers moving to suburban and rural regions during COVID-19 will normalize too. Meanwhile, with employees expected to return to downtown offices once the pandemic wanes, a vaccine will renew confidence in the urban high-rise segment. Compared to single-family sales, the urban condo segment has shown slower levels of growth this year, often attributed to a fizzling rental market and buyer migration out of the city. In October, BILD reported a sales decline of 32 percent year-over-year for new construction condos in the Toronto region, even as prices climbed by 19 percent annually.
“The fact that there was some choice to move into the suburbs or further during an unprecedented time is a momentary bump on the long-term curve and trajectory,” said Mass.
Pre-construction is a long-term game, where sales agreements are signed up to six years in advance of receiving a tangible product. Short-term concerns won’t change the fact that Toronto remains one of the world’s most desirable cities to live and invest in, Mass explains.
“When you see how we have handled ourselves during a global pandemic, we have so much to be thankful for and proud of,” he said. “Pre-construction condominium investing in Toronto will reap rewards for savvy investors for many decades to come.”