COVID-19: Is buying a good idea right now?

Before the pandemic hit, the GTA and other parts of the country had hit a record pace, and even markets like Vancouver came to life in the latter half of 2019 and early 2020. But then COVID-19 came in like a truckload of sand, thoroughly dousing the fire that was the Canadian real estate market.

Since then, the numbers have varied throughout Canada, with Toronto seeing the number of listings fall by 64% year over year for April and transactions drop by just over 67%. Smaller markets have been somewhat less affected than Toronto.

Average sale prices have also plummeted, but when you look at those numbers, it's important to remember that without context, they're actually meaningless. Just because the average sale price has fallen, say, 10%, it doesn't mean that a house that would have sold for $1M pre-COVID would now be worth $900K. An overall price decline could certainly be part of the reason, but if you take a closer look at what types of homes have actually been selling, you'll see that the focus has been on properties at the lower end of the market. And right now, homes at the more affordable end of the market are the ones that are moving.

Low luxury home sales are bringing down average price

The luxury market came to a complete halt during the first six weeks of the pandemic. There were certainly off-market high-end deals happening, but they wouldn't have been recorded in the official stats. Normally, the high-end market inflates average sale prices, so without those sales factored in, it may look like prices have dropped, when in fact, the lower-priced homes that are selling now aren't going for all that much less than they would have a couple of months ago.

Case in point: the last couple of weeks have seen average sale prices jump back up, but that's due to a small resurgence in high-end sales than prices in the middle and lower ranges getting higher. In fact, if you dig a little deeper, prices across the board look like they are actually down by something like 0-7%, depending on the housing type and area.

"Is it a good time to buy?"

That's a bit of a loaded question. Trying to time the real estate market is like trying to time the stock market...GOOD LUCK. However, having said that, now actually may be a good time to buy, for 3 reasons:

1. There's a lot less competition.

2. Some sellers are panicking and are willing to say yes to a lower price.

3. We may have already seen the bottom of the market.

Yes, prices could definitely go down more.

But remember one thing: no one makes money on their home until they actually sell it. So if you buy a condo today for a million dollars, and in six months, it's only worth $900K, have you lost $100K? Nope. You haven't lost anything until you sell – and that's only if you sell right away. But if you're planning to live there for 5 to 10 years, given the history of the Toronto market, you will earn that money back – and then some. Of course, it could also be worth $1.1M a month from now.

While there are deals out there, they may not be easy to find.

There's A LOT less inventory out there than usual. Sellers aren't exactly advertising deals, so you have to dig and make offers and take shots: no one is telling you where they're willing to compromise or what they're willing to give away. You have to ask.

As for bidding wars, we're definitely seeing fewer of them these days, but that may be because more sellers are listing their homes at higher prices. We are still in a seller's market, even though it may not seem that way: there isn't enough inventory, and stuff isn't sitting long enough for it to be a buyer's market yet.

Things to think about before you buy

The biggest thing to consider right now is if the place you're looking at buying is the right home for you. If you've been waiting six months for a property in a particular neighbourhood or a specific building and the right place comes up tomorrow, grab it – as long as you plan on living there for at least 5 years.

On the other hand, if you aren't picky about location and just want a deal, they are certainly out there. But to find one, you need to be working with a well-connected agent who knows what they're doing. I recently got a client a home for 83% of the asking price – but we hunted.

The most important thing to remember is that YOU CAN'T TIME THE MARKET. Yes, economists are saying it's going to go down even more. But guess what? Those same economists have been saying that since I got into the business in 2011, and in that time, Toronto home prices have more than doubled. Hopefully, these economists weren't renting and waiting for the "bubble to burst."

If you're thinking about buying right now or want to ask an expert some questions to help you decide, get in touch with a Condo Pro today – they are always happy to answer your questions and help you make an informed decision.