Benjamin was not surprised by the market recovery- but he was surprised by the speed at which the recovery happened. Due to qualification rates being higher than they were in 2008, he feels this has been the most housing-market-friendly recession ever.
He explains how the bulk of job losses during this recession have been low-wage occupations, many of them being renters who are not involved in the resale market. Therefore, with a large segment of households untouched by this crisis (from a financial standpoint) as they still have their jobs and income, many of these people are now sitting on excess cash levels. Coupled with the low-interest rates, it is a perfect opportunity for buyers.
Benjamin also speaks to an improvement in the low-rise market segment- something he thinks makes sense because of the nature of the crisis (people looking for detached homes). However, he sees this increase in prices on detached homes as an issue for people wanting to “move up” into a larger house- it is why we see movement out of the 416 area.
He sees this trend continuing for the next six months or so- with the winter being a traditional weaker real estate market.
“I think that the 416 condo space will feel most of the pain because we have a lot of supply coming in, and demand is slowing. Having said that, I think that as we reach the other side of this crisis, the later the second half of 2021, we’re going to see a situation in which people start realizing the rental space in downtown Toronto is a bargain. You will see demand returning in between. I see some adjustments in supply and some developers that basically front load and that activity will not be there during the winter. So the net result of some reduced supply in the second half of 2021 and marginal improvements in demand, we see some improvement in this market as well. But in between, we have to go through the winter.”
He continues by saying that the fleeing of the people from the downtown core is not a long-term trend. He feels optimistic that people will go back to downtown, and the trend will continue- even if it is at a slower pace than before.
He advises that if you’re looking for a quick investment, it is better to wait. However, there will be excellent entry positions for the long-term horizon giving the softer nature of the market. He believes that spring will be strong.
He is also very optimistic about the second half of 2021, with the economy rising by 4-6% with improvements in the housing market due to the vaccine.
Finally, he finishes off by saying that the market is soft, and may get softer, so the next few months will be an excellent opportunity to buy a condo downtown.