Globally, the COVID-19 pandemic has caused significant disruption in every industry and market. For real estate, the impact has been substantial, but many industry professionals feel that the market will be able to recover. What the Ontario real estate market looks like following the pandemic, however, remains open to discussion and debate. There are a few common ideas, though, that signify where the market is headed.
Lower House Prices
Typically, the high price of available residences is influenced by low supply and high demand. However, with the unprecedented halt of sales, these factors currently play a minimal role in the success of real estate dealings. Coupled with the fact that many individuals are without income and may be struggling financially, the high home prices of recent years may not bode well with the emerging population of hopeful buyers. As a result, it is anticipated that we will see many homes offered at lower prices than they might have sold for earlier in the year.
Risk of Market Burst
With any significant economic event, there is always a fear of a market burst or collapse. Fortunately, while the real estate market is already dealing with some detrimental impacts of the pandemic, the good news is that it will likely recover with relative ease thanks to the inherent value of real estate. To collapse, a market typically experiences several factors, including low demand and excess in supply. While at this time, the market may seem like it is suffering; the truth of the matter is that this circumstance is not permanent. There will always be a demand for real estate, so a market collapse is unlikely.
Sluggish Return to Market
At present, home sales have more or less stagnated as individuals obey stay-at-home orders and practice social distancing. Even as orders are rescinded and businesses re-open, it is projected that the return to the housing market will be a sluggish one. More individuals will demonstrate caution as they look to buy, and their budgets will likely be stricter than before. Still, the return is inevitable, and even if it takes time for the real estate market to bounce back, it will manage.
Low home prices and the need for adaptation will significantly influence the near future of the real estate industry. However, despite the challenges that the real estate market faces, its ultimate recovery is likely.
If you are looking to buy or sell a property in the GTA, please contact Mehran Redjvani of Re/Max West.