Right now we are possibly looking at a repeat of the 2017 market.
We saw the Toronto real estate market peak in 2017. Actually, the highest price historically for average single family home in the GTA was achieved in April 2017. At that time the price was $918,138.
Then, the bottom dropped out of the market and by August 2017, the average house had decreased to $731,606, that’s $186,532 or a 20.32% decline.
The drop took place in May, June, July and August. After that, the market began to recover.
The question is: how long will it take to get back to $918,138? Actually, it took 22 months. The average price as of 29 February 2020 was $910,290. That price is within 1.01% of the April 2017 peak. That was a 22 month recovery. To exceed that price we waited until June 2020.
What about the deals in progress now?
The real difficulty is the difference in value between now and the closing date.
Will a lowered value interfere with the financing? Some Buyers will resist, just like those in 2017. While those Buyers suffered a decline “on paper”, it was really only those who decided not to close who suffered a real loss. Those Buyers who closed have broken even now, and subsequently made money. So, consider secondary financing to get the deal done, including a second mortgage for the shortfall from the Seller.
Brian Madigan LL.B., Broker