COVID-19 Real Estate Market Update April 1-7, 2020
As we enter into week 3 of Ontario’s COVID-19 countermeasures to flatten the curve, business is starting to show signs of significant slowing.
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 is deemed an essential service, it’s not business as usual.
If you’re looking to buy or sell during this time, both myself and my tea are still working. I’ll be happy to discuss with you safety precautions and changes in procedures that we have implemented due to COVID-19.
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 April 1-7, for both 2019 vrs 2020 these are the raw numbers:
|# of Sales||224||33||-85%|
What’s obvious from this chart is that sales are down big time compared to the same week last year. However keep in mind that this is due to the extreme social distancing measures and buyers choosing to delay house hunting. In order to get a true sense of what’s going on I’ll dig further into the numbers below.
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 softening slightly, however there are any sellers simply choosing not to sell and wait the downturn out.
- Taking the Toronto Market Watch Report from March 2020, home sales were up 12.3%
- When comparing the first week of March 2020 (pre Covid-19) to April 107, 2020, prices appear to be down only 4.5% on semi detached homes in Mississauga
- 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 April TREB Market watch report and looking at the MLS price index (which takes into account statistical anomalies) to get a better idea.
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.
Here are my findings and educated guesses summarized.
- The real estate market continues to slow 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 50-80% 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!