COVID-19 Real Estate Market Update
What started out to be a a very busy year for real estate in Mississauga and the Great Toronto Area hit a bump in the road in mid March. Who would have known that a mysterious virus originating in China last December would spread it’s wings around the world at such an alarming rate?
Here in Ontario, all businesses not deemed an essential service have been ordered closed, and people are being asked to social distance themselves to stop the spread of the virus. While real estate was deemed an essential service, it’s not business as usual.
Below is a summary of how the real estate market in Mississauga has been affected by the COVID-19 outbreak. The data has been based on MLS sales over the past week.
Mississauga Real Estate Market Update
The first thing to check is the total volume of transactions that have taken place since the start of the COVID-19 restrictions. As you can see there’s been a significant impact. Less homes for sale in Mississauga and less sales have had the greatest impact on the market so far.
Comparing March 23-30, for both 2019 vrs 2018 these are the raw numbers:
| 2019 | 2020 | % Change | |
|---|---|---|---|
| New Listings | 362 | 253 | -31% |
| # of Sales | 224 | 93 | -58.5% |
Home Prices
This is where things get a little more tricky and it’s not simply comparing average selling prices year over year. To get a better idea of what’s going on, you need to compare what has changed over the past month in real estate. As of the writing of this post, prices appear to be holding steady all things considered.
- Taking the Toronto Market Watch Report from February 2020, attached homes showed an average increase of 11.17%
- Comparing the average selling price from March 23-31 (2019 versus 2020) shows an increase of 7.3%
- When comparing the first week of February 2020 (pre Covid-19) to March 23-31, 2020, prices appear to be down only 0.5%
- The Sold to Ask Ratio is still at around 100%, indicating that most sellers are willing to hold firm. Keep an eye on this stat as we continue into April.
- It’s important to note that comparing prices is not an exact science, as no 2 homes are ever the same. I recommend waiting for the TREB Market watch report and looking at the MLS price index (which takes into account statistical anomalies) to get a better idea.
Pricing Trends
While many home buyers and sellers will choose to wait the market out and see what happens, the fact is that there are people who have to sell their home. With this in mind I want show what’s going on to see how the trends are going. In order to make this comparison as close as I can, I selected semi detached homes in Mississauga, with a list price between 600-900k.
| Date | Average List Price | Average Taxes | Factor: List Price vs Taxes Ratio |
|---|---|---|---|
| February 1-8, 2020 | $780,317 | $3,963 | 196.90 |
| March 1-8, 2020 | $788,328 | $4,022 | 196.00 |
| March 23-31, 2020 | $800,953 | $3,923 | 204.17 |
What the above chart indicates to me is that home sellers are raising their asking prices, closer inline with what they actually expect to sell for. So in the short term expect to see less real estate bidding wars and multiple offer situations.
Summary
Here are my findings and educated guesses summarized.
- The real estate market has definitely slowed down since the COVID-19 outbreak, which is totally expected.
- While the numbers will be different based on area, price point and housing style, it’s safe to say the number of sales reported will drop between 30-50% in the short term.
- While it is harder without more data to determine the effect on prices, my research indicates prices are still holding for the time being. This could be due to the fact that the number of listing has also declined, thereby keeping the absorption rate low.
- Expect a reduction in multiple offer situations and a return to negotiation between buyer and sellers.
- Sellers: Expect less showings, and less offers if you are listed. However homes are still selling and prices are holding for the time being. Being properly priced and using online marketing is key.
- Buyers: If you don’t like bidding wars then this could be a good time. However, realize that unless a seller has to sell, don’t expect them to roll over and give the home away at a huge discount. Watch my video on how to buy a home below asking price.
- The market fundamentals of supply and demand are still there in the GTA. While no one can predict how long COVID-19 will last, I expect once consumer confidence returns to see the real estate market rebound. In other words if you’re waiting for the market to crash, you’re probably going to be disappointed.
Stay tuned for my next update and if you need to buy or sell during this time, we are still working. I’m happy to schedule a time to discuss strategy and safety precautions to get you where you need to go!
Stay safe!!
