$5M in 5 days: Buyers Appear Unafraid of the COVID Market
Sometimes the market speaks in places you don’t always expect.
Twenty minutes outside of downtown Hamilton, nestled in the quaint little town of Caledonia, an Empire Communities development called Avalon is offering some insight into the real estate industry in the time of COVID-19.
Last week, Empire launched phase 5 of what they hope will eventually be 3,000 new family homes across 530 acres. The semi-detached, small detached, and large detached homes they released ranged from the high 400’s (semis) to the mid-600’s (large detached). In five days, they had sold half of their phase 5 inventory.
They did so without a single buyer coming to a sales office or seeing a model home.
Everything, everything, was done virtually.
What’s more, according to Dan Flomen, President of TFN Realty, the houses being purchased in phase 5 were all roughly $20,000 higher than those sold in phase 4, which just closed in February.
All of this is to say, the comparison in sales between pre- and post-COVID outbreak in Empire’s low-rise communities hasn’t been drastically affected. Flomen does guess that in a pre-COVID market they likely would have sold out 80% of phase 5 in the same timeframe, but says “buyers are still there, you just have to be patient and not push them to make a decision in 10-min like you might have earlier in the year when everything was red-hot.”
Flomen also notes that every single one of the buyers was an end-user. “Our buyers were all real people, real families, from places like Maple, Georgetown, and Mississauga. Probably the difference between now and pre-COVID is that the more difficult units would also have likely sold by now to investors banking on capital appreciation, but in this market it’s the investors that are holding off.”
Of course, it’s not just Caledonia that’s seeing consistent interest from buyers. Flomen also mentions he closed two pre-con one-bedrooms at Empire Maverick Condos at 321 King West this week that were priced at $1,500 a sq. ft.
Interest in cottage country north of Toronto has also been getting its fair share of attention lately. Max Hahne, broker of record at Engel & Völkers Collingwood Muskoka, told Toronto Storeys that, “In the third week of March we were still seeing the same number of inquires, but we’ve been seeing an uptick in the number physical showings since Easter.”
Given the demand from buyers and the continued lack of inventory in major markets, TD Bank has even – in the middle of a pandemic – recently forecast home prices in Toronto to increase by nearly 8% in 2020.
So whether it’s a 12-minute drive from the Hamilton airport, across the street from TIFF Bell Lightbox, or a Muskoka chair somewhere hours away from the city, buyers are continuing to show they’re not afraid of the COVID market.
For an in-depth look at where the real estate market currently finds itself in the time of COVID-19, including insights from Don Kottick, president and CEO of Sotheby’s International Realty Canada, Benjamin Tal, deputy chief economist at CIBC, John Pasalis, president of Realosophy Realty, and many others, you can check out our Real Estate of the Union.