One COVID-Year Later: Everything That’s Happened in Toronto’s Condo Sector
Guess who’s back, back again? March. Or, at this point, is it simply March 373rd?
Either way, we’re officially staring down the barrel of one year of COVID-19-related shutdowns in Toronto.
In mid-March 2020, many city-dwellers were sent home from their offices, told they may not return for a couple weeks. From there, you know the story: two weeks turned into two months, then six, then eight.
Now, a year later, we’re reflecting on how the pandemic has influenced the real estate market.
From pre-viral predictions and plummets in activity to an impressive holiday-season rebound, the condo market has taken a particularly wild ride through the last 12 months (the increased need for home offices considered).
Come, join us, as we reminisce on the journey:
Winter 2019-20: Pre-COVID Predictions
There’s something tender — even innocent — about recalling the days before COVID had reached Toronto. Or, to be more accurate, before the virus had even entered the zeitgeist.
As 2019 closed, industry insiders made their predictions about what the turn of the decade would bring Toronto real estate. The condo sector was projected to remain the city’s hottest, with persistent demand expected to push costs ever-higher.
Prices and availability were to be influenced by the rental market, particularly during student semester start-times like January and September.
These predictions were presented via deep understanding of the industry’s ins and outs but, even then, we warned that only time could tell what would actually happen.
And time certainly did tell.
Spring 2020: The Condo Market Doesn’t Bloom
The year started out strong. Activity was bustling and, even as word of the novel coronavirus began circulating in January and February, sales were up 9.7% and 26.2% respectively in those months.
But then March arrived, and the energy shifted.
As a result of COVID’s tightening grip, both prices and transactions began to fall. The last two weeks of the month saw an 80% decline in condo sales from the same period the year prior, real estate agent Doug Vukasovic said at the time.
These drops, while jarring, made sense: countless downtown offices were closed for the foreseeable future, and the benefits of the core lifestyle were experiencing the same fate. Downtown-dwellers were asking themselves, “why live along King West when there’s no King West to go to?”
And, at the time, vaccines felt like a thing of the far, far future.
Meanwhile, Zoocasa reported that the median condo apartment price declined $65,000 (a drop of 10%) between February and April to reach $574,000.
According to the Toronto Regional Real Estate Board (TRREB) Q2-2020 Market Reports, which assessed the condo rental and condo resale markets, the impact the pandemic was having on the city’s condo sector was inarguable.
Through Q2, TRREB reported 3,459 condo resale transactions – a lowering of 50.8% compared to 7,024 sales in Q2 2019. The number of new condominium apartment listings amounted to 8,717 during the same period, which was 21.6% lower than Q2 2019’s 11,114 new listings.
Meanwhile, through the same duration, 7,320 condominium apartment rentals were reported through TRREB’s MLS system, a year-over-year decline of 24.8%.
In the case of rentals, the number of condos listed for rent throughout Q2-2020 was up by 42% year-over-year, indicating that listings outperformed transactions.
By July, it was clear the city’s rental sphere had softened for the first time in years.
For those in the market for a new rental condo, this news may have called for a (physically distanced) celebration of sorts, but for investors and landlords across Toronto, the declaration was much less exciting.
Autumn 2020 Brings Bottom of COVID Condo Crash
The fall season couldn’t have known as much, but as it settled in, so did the proverbial “valley” of COVID’s affects on the condo market.
TRREB reported that year-over-year, condos saw a sales increase of only 7% in September. In the 416, the month saw 1,549 properties sold in the sector.
As activity crawled, prices slowed their roll, too. Toronto condo prices saw a year-over-year decline of 3% in November, TRREB reported, marking the first proper decline in year-over-year prices since April, when costs had dropped ~4%.
(Notably, too, October only squeaked by that threshold, managing a gain of less than 1%.)
As both sales and prices lowered, would-be investors may have been considering autumn as their moment to strike toward downtown’s condo market.
But at the time, experts warned: while where condo-owners and landlords were challenged, and renters gained a theoretical upper hand… many were left wondering what they’re actually paying rent for.
Long-justified by access to restaurants, bars, museums and transit just outside their (building’s) front door, the cost for downtown condo rentals simple wasn’t cutting it for much of 2020. For investors that meant — in order to mitigate the risk of buying and being unable to find tenants — it was probably better to watch and wait.
Little did anyone know, with winter on the horizon, the wait wouldn’t be long at all.
Winter 2020-21 Turns the Heat Up Again
When discussing pivotal moments in the condo sector through this last year, we go back to December all the time.
“The condo market turned around, literally, in a span of six weeks,” John Pasalis, President at Realosophy Realty, told STOREYS earlier this winter.
The industry insider was reflecting on how the end of 2020 saw a turnaround for the sector. Indeed, December data showed a whopping 75.9% upswing in year-over-year activity.
As for the why behind the sudden bounce-back, Ron Butler, founder of Butler Mortgage, nodded to a certain announcement pertaining to shots in the arm.
“Nothing since the start of COVID in March of 2020 has effected the downtown Toronto condo market more than the recent announcement of a vaccine,” he said at the time.
“As if by magic, deep concern over falling rents and likely falling values vanished. The fact that there is now a definite timeline for the return to urban living means condo owners and condo investors can choose to wait until the market returns to normal.”
These insiders placed bets on the sector’s creeping back, and a Market Watch Report released just days later by TRREB backed them up. The data showed condos in the 416 saw 1,703 sales in January; a marked 85.5% increase over the same month last year.
Mark that: two strong months of sales back-to-back, served up alongside a triple-threat of lowering COVID case reports in Ontario, increased vaccinations and, (fingers crossed,) a growing sense of hope buzzing through the shared collective.
Indeed, the condo market was back in action.
But while the sector’s activity proved to be zooming full-speed ahead, prices hadn’t caught up yet. TRREB’s new report said, in fact, that January’s condo prices showed an 8% decrease year-over-year, reaching $624,886.
It was those prices hanging low, according to RBC, that could bolster continued activity in the condo sphere.
Spring 2021: A Condo Market in Bloom
While no, it’s not technically spring quite yet, we are only days away from the seasonal solstice. As the city is enveloped by milder temperatures and post-6 pm-sunsets, industry insiders predict the weeks and months ahead will only mean continued recovery for the condo sector.
“There’s certainly a marked turnaround in demand for condominium apartments to the point where we have seen very strong sales growth,” Jason Mercer, Chief Market Analyst for TRREB, told STOREYS earlier this month.
“But I think what’s even more important to point out is the fact that that sales growth has been outstripping listing growth on a year-over-year basis, which means the market conditions are tightening up again.”
The continuation of this trend, Mercer explains, would lay the foundation for renewed price growth in the downtown condo segment. He predicts these shifts could be evident in the market as early as the second half of 2021.
Benjamin Tal, Deputy Chief Economist of CIBC World Markets Inc, shares in Mercer’s prediction.
““I think the softness in the condo space can be sustained over the next few months, but I believe that the second half of the year and clearly into 2022, you will see an increase of activity in this market,” he told STOREYS this month. “It’s starting, already, to stabilize.”
Read: by Q3 of this year, the sector may have already made significant strides in its COVID-10 recovery.
Remember, though, as the last year has taught us, it is truly impossible to predict the future — educated as our guesses may be. To quote, well, ourselves: “only time will tell what actually happens.”
Still, here’s hoping these projections of recovery are right on the money. (And 2021 has fewer unpleasant surprises up its sleeve.)