Shifts in a city’s real estate market tend to move slowly, driven by a variety of market forces working together. Unfortunately, that conventional wisdom has been thrown out the window with the coronavirus pandemic, which is not only changing our everyday lives in profound ways, but has also led to a quick reset of the Toronto real estate market.
A new report from Zoocasa demonstrates just how quickly and deeply the current state of the world has affected the Toronto market, at least in the short term. Realtors in the Greater Toronto Area were initially looking forward to a solid summer after a strong start in the spring, but when Ontario declared a state of emergency on March 17, most buyers and sellers effectively hit the pause button.
This, noted Zoocasa’s report, created a precipitous and instantaneous slide. “According to our calculations, the sales-to-new-listings ratio (SNLR) – a measure of market competition calculated by dividing the number of sales by the number of new listings – dropped to 38 per cent for detached and semi-detached homes in the GTA between March 17-23 compared to 53 percent for the week prior to the emergency declaration,” notes the report.
A similar trend occurred with sales of condos and townhouses, with the SNLR dropping from 55 to 40 per cent during the same period of time.
According to Zoocasa, an SNLR between 40 per cent and 60 percent is considered to be a balanced market. When that number dips below 40, it creates imbalance that favours buyers.
During the March 17-23 period, the number of new listings for detached and semi-detached homes dropped by 14 per cent compared to the previous week, while sales dropped by 38 per cent. This was mirrored in the condo/townhouse sector, which saw a 35 per cent drop.
When Zoocasa expanded its scope to include the following week, that drop went even further. During the period from March 17-30, sales of detached and semi-detached homes dropped by a 53 per cent over the previous two weeks, while new listings fell by 30 per cent. Sales of condos and townhouses likewise dropped by 53 per cent during that same timeframe.
As a result, the SLNR that had been 62 per cent – characterized as a sellers’ market – has dropped to 40 per cent, transforming into a buyers’ market in a mere two weeks.
As Canadians continue to heed recommendations to stay home as much as possible, the long-term impact on the Toronto market remains to be seen.
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