The coronavirus pandemic took everyone and everything off their feet in a very short time, and that’s a fact. The Toronto real estate market was no immune to the effects of the coronavirus pandemic.
However, considering all, the Toronto property market got through all of it relatively intact. At the same time, something strange happened; condo prices in Toronto went up.
The economy is officially in recession, unemployment is peaking, yet condo prices keep on growing, which made many people wonder how that is possible. What does make Toronto condos recession immune?
At first, it might look illogical, but only if you are not familiar with the Toronto condo market. In any case, here’s how it all comes down together.
Demand & Supply
Yes, this is the main drive, no matter whether you got a pandemic or not. The demand for condos in Toronto outmatched the supply long before the coronavirus pandemic. Each year, around 120,000 people migrated to the greater Toronto area. Many of them preferred to live in a condo than in a house.
Due to the pandemic, that number is significantly reduced, but the supply still can’t catch up with it. That’s one massive reason why condo prices didn’t take the slope, at least not recently, and not likely in future.
Land Prices Rising
The simple fact is that land across the greater Toronto area is getting scarcer, which means more expensive. Landowners know that and adjust their asking prices accordingly. They might be slightly reserved because of the current pandemic, but once things settle, their “adjustments” will likely be felt all over the residential property market.
Builder’s costs are rising.
Pretty much all trades didn’t stop throughout the pandemic, and that’s a good thing. However, once their contracts come for renewal, it is fair to assume that their prices will be higher than before. So add that too on top of everything else.
Strong middle class
Even though unemployment rates are rather high, there is a strong middle-class that is not doing that bad. These are mainly people in good financial conditions with plans to buy a condo before the pandemic. For a moment they got scared by the magnitude of the coronavirus pandemic, but now feel more comfortable to proceed with their buying plans.
Property investors adjusting their strategies
It is fair to say that the coronavirus pandemic had a profound impact on property investors as well. Many of them are still concerned whether the country might get hit by another wave of infections this fall, and that might lead to restrictions that can further strain the market. The lack of new projects signals the sellers not to budge on their asking prices.
All in All
Each of the factors mentioned here impacts condo prices, some of them more than others. Of course, there are other minor factors, but these are the heavy punchers, the one that makes all the difference in the world, or at least in the greater Toronto area.