This year has definitely been a very interesting year for Real Estate in Ontario, Canada. While most people thought that Real Estate prices would plummet everywhere, it didn’t. in fact in many areas of Ontario it has gone bananas. Places like Windsor and little towns with cheap real estate prices suddenly were doubling and tripling in value over night. These are phenomena that we’ve only seen in the Greater Toronto Area. Houses while always in demand, are almost impossible to find and afford. The one casualty that has come from the pandemic is condos. Here’s why.
1. Immigration: Condos have become the first vehicle into the housing market for many people either coming to Canada. It is the cheapest and lowest form of real estate and generally if you live in the city you do not have to own a car, you can use public transportation. Since immigration has a been totally stopped, this whole pool of buyers are not there.
2. Investors: An easy way to get into real estate investing is to buy a condo that is set to be built in a few years, and enjoy the easy pay options most builders offer. It’s a no brainer. When the pandemic started the Ontario government said that landlords could not evict tenants and tenants didn’t have to pay their rent. This may have stopped for now, but many landlords thought that now is the time to take my money and run, put that money into stocks, put it into my own house, or take the money sell my two or three properties and buy a house. Basically investors are dumping their condo properties.
3. Students: This goes hand in hand with immigration & investors, but there are also domestic students who go from other cities, provinces to come to Toronto to go to school at one of the major colleges or universities. Many schools are closed and online classes are taking over.
4. Working from home: I’m sure if I look for a stat it would be staggering at how many people and companies are working from home. I also think it will stay that way to a degree. (More on that later) Everybody is working from home, many don’t have a choice. So if people are working from home, why do they want to be in the city? They don’t need to be, so for the price of their condo, they can buy a house with a lawn, a pool, and space to enjoy.
5. Everything is closed: There’s no baseball games, no hockey, no basketball, no concerts, no movies, no nothing. You get it and know there is really no reason to live in a city right now if there is nothing to do in the city but walk outside. Many things that are appealing of city life right now are just not there.
All of these points above are all in combination together, one reason or another, and that is why there is such a dumb of condo inventory right now. It’s the perfect storm for prices to drop to where they are. This is not a phenomena just in Toronto, it is all over the province and I suspect everywhere such as New York.