The outbreak of the new coronavirus has a direct impact on Toronto’s property market.
What surprised me a lot is that many friends actually looked at this issue in reverse, saying that there are opportunities hidden in the crisis itself. They asked me repeatedly, “Dude, help me stare at it, I want to buy at the bottom.”
Understandably, seeing a lot of rises and bidding wars from the end of last year to March this year, and many people were panicked, afraid of being thrown out of the real estate train. That’s why they want to take this opportunity rarely seen. The problem now is that if a lot of people want to buy at the bottom, it means that the property market may never collapse.
Let’s take a look at the impact of the current housing market, and then analyze the possible future trends.
First, let us have a look at the year-on-year market volume in April in GTA:
We can see that in the second-hand housing market, whether it is for houses or apartments, the transaction volume has fallen sharply. Apartments are worse, down up to 72%. Is a decline of more than 60% be within everyone’s expectations? In fact, many people think that they should have fallen more. Is it a policy that showing is stopped? Why is the transaction volume not zero?
It seems that for the most important asset in most families, when encountering such an opportunity rarely-seen for decades, some people try all methods to get it.
Does the cut in volume also mean a collapse in prices?
Let’s look at the year-on-year data of the average price of second-hand housing in most regions in April:
We can see that whether it is for houses or apartments, there is a rising in prices. Are you disappointed? Whether it is true that before the house prices collapse, your mood collapsed in advance.
A smart friend said, no, Charles, the price has already gone up in early 2020. It does not make sense to compare with 2019? What if we compare numbers with March?
Let’s take a look at the data:
Regardless of whether it is a villa or an apartment, the transaction volume also fell sharply, more than 60%.
What about the price? Let’s take a look at the data:
According to the transaction data, compared with March, second-hand villas rose 6% and apartments rose 12%.
Cry for a while and we will talk about it. Where is the crash?
Are you calming down?
First of all, as I mentioned all the time, the average price can hardly explain the rise and fall of prices, and more reflects the transaction structure. If there have been more transactions in luxury houses, and the average price has gone up. If all transactions are in small units, the average price will come down.
Secondly, the above data is for all regions. It is not same for each city, the demand and supply situation in each city is different. I have such a table in hand, the data volume is huge, if you need it, you can share it for free.
Finally, house prices are resilient to the Covid-19 epidemic. From the perspective of demand, it is true there are fewer buyers who may be wandering in the market to take chances, but those buyers in true need are still there hunting and placing orders. Meanwhile, if you look at the supply, the impact of the epidemic has not yet shown up. As long as someone buys it, many sellers can hold on to the price. However, if the epidemic situation exceeds a certain period of time, the market will undergo tremendous changes. How to judge whether this change will occur? Just look at the following two indicators.