Houses still selling for sky-high prices in Mississauga--but COVID-19 could change that
When all levels of government began gradually curtailing freedoms (and the province began mandating the closure of all non-essential businesses) in an effort to stop the spread of the novel coronavirus, many people expected the housing market to freeze.
While a freeze (or even a dip) is still possible over the coming weeks and months, it appears that houses changed hands quite rapidly—and for a lot of money—in the month of March in Mississauga.
According to Nik Oberoi, a Mississauga-based sales representative with Cloud Realty, the city's red hot market didn't slow down after the federal and provincial governments began to crack down on travel and non-essential movement within the country in response to the COVID-19 pandemic.
Oberoi says that between March 13 and March 23, 97 homes sold in Mississauga. On average, homes were listed for $956,409—but the average selling price was $987,662 (which suggests people are still engaging in bidding wars).
Oberoi says a large number of the sales are occurring in the Churchill Meadows, East Credit, and Lisgar neighbourhoods, which have been popular amongst buyers for some time now.
Oberoi says that over the same 10-day period, 93 condo sales were recorded. The average listing price was $582,572, but the homes typically sold for $605,615—evidence that the market stayed hot even after the federal government took the drastic step of closing the border to all non-essential travel.
In the Square One area specifically, the average listing price was $562,500 and the average sale price was $582,240. Oberoi says 22 units were sold in the area over the 10-day period.
As for why the market was still firing on all cylinders in the wake of travel bans, business closures and Ontario's state of emergency, Oberoi says there might still be some denial that it's not business as usual in Mississauga and beyond.
"As for this real estate market, I find it absolutely nuts. I have no idea why people are continuing to proceed as normal with showings. I understand those who are doing virtual tours but still, people are not taking this seriously and more and more listings are coming up," he says.
"I’m just wondering when people will realize this is serious and we should stop the flow of traffic towards new properties to avoid spreading the virus."
Oberoi says that realtors have been formally advised to stop hosting open houses and interacting with clients in person whenever possible, but he fears not everyone is listening.
"Everything is still selling over asking. I feel like I have an ethical obligation to say that this simply doesn’t make sense to me," he says.
While real estate agents are free to help clients buy and sell houses—real estate services were recently deemed essential by the province—there is pressure on them to comply with social distancing measures.
On March 25, the Toronto Region Real Estate Board (TRREB) announced it was strongly encouraging realtors to heed social distancing recommendations by refraining from engaging in "face-to-face real estate practices" during the provincially-declared state of emergency.
In a news release, TRREB said that realtors should use alternative marketing strategies, such as video and virtual tours, wherever possible.
"In light of provincial government restrictions on public gatherings and guidance regarding social distancing, TRREB is doing its part to limit face-to-face contact by suppressing public open houses for the time being on its Stratus MLS system, and removing them from public-facing websites until it is safe to restore," said TRREB CEO John DiMichele in a statement.
"TRREB will also not enforce its MLS rule dealing with showings and inspections while the current government health advisories remain in effect. Property listings on the MLS system will not be suspended because a property is not available for showings or inspections, which is what the rule requires."
While it might seem strange that people are still actively searching for properties when the Canadian economy is in flux, it isn't entirely shocking. Many people were searching before the crisis reached a fever pitch and need to sell their homes as soon as possible—especially if they bought a house before the world began to shut down.
Oberoi also posits that homes may be selling for more because people believe that now is the time to “snag” a property since fewer people will be—theoretically, at least—jumping into the market.
But if you don't need to buy right now, should you?
Oberoi says that now is the time for people to take COVID-19 very seriously and proceed with caution when it comes to big purchases.
"If people don't take this seriously, the issue will get bigger and bigger. Don't commit to buying a home if your job is uncertain. People in precarious situations should not buy right now. If something happens and people need to sell in droves, that can lead to a market collapse," he says.
While recent numbers suggest the GTA market is still in good shape, it's impossible to predict how the market will perform in the coming weeks and months—especially if consumer behaviour changes dramatically due to income loss.
"The numbers show that the real estate market is strong. However, there is pending uncertainty," Oberoi says.
"How long will social distancing rules be in place? How will consumer spending look over the next six months? How will it look after this pandemic is over? I think the real estate market is strong right now and I’m always optimistic about housing because people will always need a place to live. However, if consumer spending stalls because jobs are lost, that will have an effect on the real estate market in at least the short term."
While Oberoi says it's difficult to predict what the market will look like once the pandemic is over (or at least under control), he does say it's possible that residents will see a lock (or little upward or downward movement) in home prices.
"People will want to live within their means, so I think there will be a lock in prices in real estate for now. To predict whether prices will go up or down, that depends on how this is handled. If things are back to normal soon, we could maybe see a small dip in prices. A "burst bubble" is not too likely. If this goes on for six months, for example, I don't see people investing [in real estate] if they're focusing on surviving."
Oberoi says the pandemic is likely to calm the market, at the very least.
"This could calm the craziness down because people are not investing that much right now. This will take some buyers out of the market, in my opinion. It'll only be for people who want a place to live."
Oberoi also says that if people temporarily stop buying and selling entirely, the market could simply stagnate.
"We have to sit tight and let's see what happens. As more data comes in, we can make stronger predictions. We're still in a state of denial right now. We haven't fully accepted that this is a real situation. Once it becomes more serious, it'll be interesting to see the numbers."
Oberoi says that anyone who is dead-set on buying a property right now should ensure that their financial situation is stable. He also says buying pre-construction might be a better (and safer) option, as such transactions can be completed online via docu-sign.
While Oberoi expects fewer listings to hit the market in response to the uncertainty created by the pandemic, he believes that housing will always be a sound investment in the long run.
"People will always need a roof over their heads. If you can buy now—if it's safe to do so and you know you will live there for 10 to 15 years—you aren't likely to lose anything long-term. Don't be naive, however. If you don't have enough savings or your job is unstable, do not buy right now."
Cover photo courtesy of @idris.yyz
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