It may be hard to imagine amid the stock market volatility and business shutdowns, but Toronto home prices are expected to rise 7.8 percent by the end of the year over 2019 prices even as the COVID-19-spurred downturn causes home sales to plummet through the spring.
TD’s Economics team published the forecast earlier this week as part of its update on the evolving impact the pandemic is having on Canada’s housing market.
While TD Economist Rishi Sondhi wrote that the pandemic has put housing activity in a deep freeze “awaiting the COVID-19 storm to pass,” prices in Canada’s largest market are resilient and unlikely to suffer as much as the major declines in home sales may portend.
It’s not that the TD team expects prices to rise significantly even as the destructive disease tears through the country. Instead, Sondhi writes that the substantial momentum the Toronto market had coming into 2020 and the gains seen early in the year before the pandemic hit are enough to offset the flattening of home prices that’s anticipated for the remainder of the year.
The Toronto Region Real Estate Board (TRREB) reported a 16.7 percent increase in the average sale price of a home in February before the pandemic was declared by the World Health Organization in March. The gains continued into March as the average sale price reported by the board in the first half of the month was $931,788, up 16.8 percent from the same period in the previous year.
TRREB is set to release its April price and sales data early next week, providing the first substantial view into the impact of the pandemic-fueled downturn in homebuying activity. It’s expected to be bleak, but the TD team believes activity and prices in markets across the country will begin to reverse course by the end of the second quarter.
“Sales are poised to plunge at a historic pace in April, while gradually recovering their lost steps in subsequent months as buyers remain cautious,” wrote Sondhi.
“Canadian home prices [will] suffer an outsized decline in the second quarter. After which, national average home price growth should proceed at a positive, but subdued pace for the remainder of the year,” he continued.
