Fomo and your Real Estate Market Update
The past year has been an interesting rollercoaster for the Real Estate market, with many investors using their own playbook's tactics in what was once a predictable investment space-and has become anything but. If you were to quickly rewind to early 2020 you might remember that the real estate market was doing quite well, January sales were sharply up over December's by 4.8%, that's also a 15.4% year-over-year increase. House prices also followed suit as the squeeze in the market began to take hold, prices jumped a staggering 12.3% year-over-year. February continued with the same optimism, as did March, but the Pandemic took hold in the second half of March which saw a decline of 15.9% in sales in comparison to March 2019. Market optimism took a precipitous fall as the unknown with mandatory lockdowns took hold, the buyer's market quickly shrunk and held back their dollars till some certainty was regained. This process continued through the spring months with May seeing a shocking 53.7% decline in sales year-over-year which was actually still an increase of 55.2% in sales over the month prior-April.
Toronto saw a net loss in intraprovincial migration of 50,375 people in 2020
The tides finally had turned by summer where July saw sharp increases in sales and prices year-over-year, 29.5% and 16.9% respectively. The dreariness of lockdowns and limitations had pushed people to find a solution for their lifestyles, thoughts crept into people's minds that this pandemic might not go away for a while; medical experts were throwing out predictions of 2022 & 2023 for returns to normalcy. People decided to take their furniture and dollars outside of the city - Toronto saw a net loss in intraprovincial migration of 50,375 people in 2020, this is up 3,826 from the year prior (highest seen in 20 years). This exodus saw a boom in real estate districts such as Oshawa and Hamilton where prices began to sky rocket, buyers had FOMO for land and space-a stark contrast from the concrete jungle of Toronto.
Market stagnation, if not slight cooling, seems imminent and certain-data from March to April housing sales will indicate as much seeing a 12% decline in sales (month-to-month)
Now let's look at today's market, we are on the cusp of a new trend in real estate. What's driving this new trend is up for debate as the factors are numerous and have yet to fully play out. Though one interesting tidbit is that we are nearly 12 months from when the market began it's latest real estate explosion and are now entering a new phase. Buyer's FOMO is still palpable in the entry level market ($500k-$750k) as well as rural purchases where many higher end buyers are looking to invest and hold or build themselves. Short term interest rates, ie. variable rates, are on the investors side at this moment. Bank of Canada is signalling increases in the rate to cool the market pressures though the stress test changes have seem to already done that-lowering buying power by roughly 5%. Market stagnation, if not slight cooling, seems imminent and certain-data from March to April housing sales will indicate as much seeing a 12% decline in sales (month-to-month). June 1st's stress test update will continue this downward pressure on the pricing as well as the bidding frenzy, allowing buyers to find some relief in the market at this moment.
Moving forward, whether you are an investor, first-time-buyer or seasoned realtor and you need assistance with any Mortgage or Real Estate Investment advice and planning please feel free to contact me @416-897-3921 or email me at email@example.com