As the world grew accustomed to the implications of COVID-19 and governments made rules and regulations to try to deal with the pandemic, real estate transactions continued to take place.

While there was an initial lull in most price points, housing types and areas in April 2020, since then we’ve seen unusually high levels of activity in real estate transactions.  While John F. Kennedy may have coined the phrase “A rising tide lifts all boats” to express the idea that a well performing economy benefits all, it turns out that not all boats are lifted equally.

We looked into what happened to average prices in the seven geographies that comprise the GTA to see what has taken place since March 2020.  Here’s some insights from that work.

The GTA average price went up $186,000 since the start of COVID.

Back in March 2020, the average price for a home (including freehold as well as condo properties) was $902,000.  Some 15 months later, as of June 2021, the average price is now $1,089,000.  That’s an increase of over 20% since the start of COVID, and about $186,000 on average.

Toronto was not, in fact, the big winner.

While we tend to assume that Toronto is the most expensive place to buy, and therefore that price increase makes that even more the case, we find it isn’t true when we check the data.

The average price in all of Toronto back in March 2020 was $989,000.  After 15 months of COVID, the average price of homes in Toronto is now $1,079,000.  That’s an increase of about $90,000, or 9.2% over the 15 months.

Peel beat the average but just barely.

The average price in Peel did a bit better than the GTA as a whole but it was more or less middle of the pack.

Back in March 2020, the average price in Peel was $839,000 and some 15 months later, we’re now at $1,041,000.  That’s an impressive increase but with a dollar increase of $201,000 and a percentage increase of 24%, it just squeaks in at a bit better than the GTA as a whole.  If you’re in Peel, you can still take comfort in the fact that your real estate market whomped Toronto!

York did pretty well if you look at dollars but less so on percentages.

We can look at price changes from both an actual dollar increase as well as in percentages.  When we do so, lower average price areas can show impressive gains in percentages that don’t translate to as impressive numbers in real dollars.  The reverse also holds true and with the highest average price in the GTA at the start of COVID, York couldn’t see the same huge percentage gains as some other areas.

In York, we saw the average price go from $1,038,000 to $1,241,000.  That’s over $200,000 in average price appreciation since the start of COVID, which is not too shabby!  On a percentage basis, the average price went up 19% over the past 15 months, which puts it at the second lowest percentage increase in the GTA, second only to Toronto’s 9% increase.

Halton was one of the top performing areas since COVID started.

It hasn’t been mentioned as much as other parts of the GTA in news stories, but Halton has been doing very well over the past 15 months.

Back in March 2020, the average price for a home in Halton was $933,000 and since then it has increased to $1,122,000.  That’s an increase of $289,000, or 31% since the start of COVID!  It isn’t enough to claim the top prize but Halton was the second highest gaining area in the GTA in terms of percentages and the third highest in terms of absolute dollars.

Dufferin beat Toronto but that’s about it.

Dufferin went into the start of COVID with the lowest average sale price in the GTA, around $615,000.  It ended with still having the lowest average sale price, now at around $798,000.

While it may be the most affordable place in the GTA on average, Dufferin residents can take comfort in the fact that they saw their average price go up 29% since the start of COVID.  That’s a lot more than Toronto’s 9% increase.  Even on an actual dollar basis, Dufferin went up $182,000 over the past 15 months, whereas Toronto went up $90,000.

Durham takes 2^nd place.

There have been lots of stories in the media about Durham region and how much prices have risen since the start of COVID in cities like Oshawa, Pickering and Whitby.

When COVID began back in March 2020, the average price for a home in Durham was a reasonable $654,000.  Since then, the average price has gone up to $917,000, which is a real dollar increase of about $262,000!  In percentage terms, Durham went up 40% over the past 15 months, which is a massive increase in a short time, second only to one other part of the GTA.

Simcoe was where you wanted to be!

The big winner in the GTA from a real estate average price perspective was Simcoe.  With mostly smaller municipalities in the area, Simcoe started at the 2^nd most affordable part of the GTA, with an average price back in March 2020 of $650,000.

Over the past 15 months, the average price in Simcoe went up by $335,00, which means a 51% increase in average price!  The new average price in Simcoe as of June 2021 is now just shy of $1M, at $986,000.  If you’ve been living northeast of Toronto over the past little while, you’ve likely done very well!

When we look at each of the municipalities in the GTA, it is quite surprising which places have done the best since the start of COVID.

Toronto has fared the worst on both an absolute dollar level as well as percentage basis, having seen the average price go up about $90,000 or 9% since the start of COVID. It seems likely that the high levels of condo apartments in the city contributed to that relatively small overall average increase.

Simcoe was the big winner from a real estate perspective, going up the most for both actual dollars as well as in percentages.  The average price in Simcoe went up a whopping $335,000 over the past 15 months, which works out to a staggering 51% increase since the start of COVID.

If you’re considering buying or selling, make sure you work with agents who understand what has changed since COVID impacted our lives.  Don’t hesitate to get in touch with us!

The lockdowns and social distancing routines in 2020 made many people re-evaluate what was important, what they wanted more of in their lives and what they wanted to have less of when things when back to normal.  At the same time, the COVID pandemic gave some important lessons about real estate and challenged some common wisdom.

We worked with lots of clients over the year and we’ve taken what we’ve seen and learned and distilled it into three important lessons taught to us in 2020.  Here we go!

Intrinsic beats instrumental

Decisions are often made from either an intrinsic or instrumental perspective.

An intrinsic perspective focuses on the inherent value or worth of the action.  It is doing something because you want to do it, not because you hope or plan for it to lead somewhere else you want.

An instrumental perspective views the action as useful primarily in that it is an instrument to lead you somewhere else.  The decision was made because of where you believed it could take you, not solely for the interest of the activity itself.

A non-real estate example of an intrinsic approach would be going back to school to study a topic for the love of the topic.  An example of an instrumental approach would be going back to school because you believed it would allow you to transition to a different career or achieve a different role.  The study itself was not the point – it was where it would lead you.

In real estate, some properties have intrinsic value and others have instrumental value.  A home that is located in a desirable neighbourhood is intrinsically valuable in its own right.  A home that is located in good proximity to a workplace, a desirable retail area or transit stops may be only valuable in that it is useful as long as it serves as an instrument to accomplish something else – easy commute to your job, a short walk to your preferred local amenity, or quick access to other parts of the city via transit.

During 2020, we saw many properties that were deemed valuable due to instrumental reasons lose that value as what people valued changed.  When working from home because prevalent, proximity to work was less valuable in a home.  When restaurants, cafes and shops closed, the ability to be a short walk away from a retail strip was less valuable.  When the need to travel for work or leisure lessened, transit stops were perceived as less important.

At the same time, homes that had intrinsic value did very well.  Houses in neighbourhoods that had community features and outdoor space that could still be utilized during the pandemic retained their value.  People who loved their home due to the home itself, rather than what it connected you to, saw an increase in value.

While all homes have some mix of intrinsic and instrumental value, those that were largely valued due to what living there provided access to saw a significant drop in appeal in 2020.  Condo apartments were most negatively affected by the pandemic, as many people had chosen to live in condos despite the space and privacy constraints.  With the instrumental aspects of the property removed or diminished, prices for condos dropped by 4.7% in 2020.  This equated to over $30,000 in lower average price from December 2019 to December 2020.

The lesson here is clear.  If you rely heavily on the instrumental value of a decision or asset, you are vulnerable to a change in where the decision was leading or why the asset was valuable.  As what we consider important changed, properties that were intrinsically valuable did very well in 2020.

Common sense isn’t always reliable

One thing that became abundantly clear in 2020 was that predicting what comes next was the realm of optimists and fools.

At the start of the pandemic, everyone and their mother made predictions as to the impact of the coronavirus, the likely way it would play out and how that would impact society.

In real estate, common sense said that as people grew worried about being exposed to the virus, real estate transactions would shudder to a halt as many other businesses did.

In the GTA, we had about one month where that was true and then we saw a progressive recovery that ended up exceeding previous years in many metrics.  The prevailing logic said that we would see sales dwindle to a trickle as people stayed home and waited out the pandemic.

Instead, we saw the emergence of two very different real estate markets in Toronto and the surrounding areas, with condo buildings faring poorly and freehold homes with separation from neighbours and the world rising monthly in value.

There is a very human tendency to try to reduce complex situations to more simple equations and posit a simple sort of causality.  People are scared to go out, so no one will buy.  Many buyers saw their job security diminished and they will wait to buy until they feel more certain.

With multi-directional causality, these simple predictions were often wrong at the larger level.  Certain subsets of the economy were strongly impacted in a negative fashion by the pandemic and other subsets saw things improve compared to the previous year.  First-time buyers with less job seniority and a greater likelihood of service oriented jobs saw tremendous uncertainty and the low end of the market suffered accordingly.  Middle to higher income earners saw their positions stay largely secure and depending on their industry, they may have even saw an increase in revenue for their companies.

The lesson here is that when we’re dealing with complex situations with powerful forces impacting from different directions, simple causality predictions are often wrong.  Such situations create powerful micro-markets where specific price points, housing types and locations are impacted in varying degrees.  There is no such thing as “the” real estate market and in a period of significant societal change, that is more true than ever.

Shelter is fundamental

The final lesson that came out of 2020 is to recognize that fundamental needs occupy a different space in the emotional, financial, and political realms.

From initial panic about the availability of cleaning supplies and toilet paper to decisions about which business are essential during a pandemic, we saw emotions trump financial concerns and influence political decisions.

While real estate is a favourite topic of conversation in Toronto and beyond, when we are uncertain about the world beyond our front doors, the reminder that housing is a fundamental need (shelter) made how we treated real estate far different than other, less fundamental parts of society.

At the municipal, provincial and federal levels, political decisions were made to reassure people that they would be able to remain safe in their homes.  The real estate market in 2020 was largely propelled by the historic low interest levels available for mortgages.  This was in turn a function of government policies to buy bonds and in so doing, directly impact the low rates lenders were willing to offer on mortgages.

At the same time, tenants were offered extraordinary protection against eviction, with landlords unable to evict tenants for the majority of 2020.  Real estate transactions took place despite considerable restrictions in the ability to show properties for sale.  The industry as a whole adapted and over a few months developed systems and processes designed to safeguard both residents of properties for sale as well as potential purchases and real estate agents on both sides.

The lesson that came out of 2020 in this regard is that there are powerful players in the real estate industry that are willing to take measures to ensure stability during periods of uncertainty.  Regardless of whether the real estate market “should” have crashed in 2020, governments and lenders worked to adjust the system to allow it to continue to grow.

Whenever we have a crisis, fundamental aspects of life (shelter, food, health) will be supported in many ways to preserve societal cohesion.  The regular rules that may apply to sectors that are fundamental will be adjusted and in many cases abandoned in order to make sure people have these needs met.  Anyone who thinks that normal rules of supply and demand, free market economy and other standards will apply during extraordinary circumstances is bound to surprised by what comes next.

In many ways, 2020 was a difficult year for most people.  The lessons that can be learned from it in real estate can be applied in other aspects of life.

Focus on things for what they are, not what they could get you, because where you want to go (and their ability to get you there) can change.

In periods of intense change, narrow your focus if you’re trying to decipher causality.  Generalizations may prove to be less reliable the broader you make them.

Finally, never underestimate the importance of fundamental needs.  It is easy to get caught up in marketing and confusion around what’s truly important, but when there is a crisis, you see how people focus on core needs like shelter.

It’s been quite a year and we’re glad to be moving into a new year, with new understanding of what might come next.  If you have re-evaluated what is important to you and want to work with people who have done the same, get in touch.

The attributes that appeal in a home have changed significantly this year and while some features have just increased in appeal, there are others that have become far less important.  Today we break down the five things that buyers want in a home now, in order of importance.  Let’s start with number five and work our way up to the number one thing that buyers want now.

#5 Safe Entry Zones

When you come home from a foray into the world these days, you need a space to take off your mask, put down your bag, slip off your shoes, wash or sanitize your hands and so forth.

Homes that have a zone where you can safely and easily make sure you’re not contaminating your home with the outside world are very appealing to buyers now.  We may see hand washing stations (a basin, with no running water per se) and ultra-violet or other decontamination tools become the norm.

#4 Better Storage

Yes, storage has always been important to buyers, but the pandemic has pushed this need to the forefront like never before.

Whether it is stocking up on food and cooking supplies or finding places to put the work and study supplies you suddenly need in the home, on-site storage solutions are one of the hottest products in town.

#3 Outdoor Space

If you’ve spent more time in the backyard of friends and family this year than ever before, you’re not alone.  Outdoor space offers both excellent ventilation, and in many cases, more space to physically distance than might be possible inside the home.

Homes with appealing outdoor space are commanding significant price premiums right now and if there is an outdoor living space (deck, gazebo, firepits and so forth) on the property, we see buyers willing to pay more.

#2 Convenient Layout

With the desire for more outdoor space to safely visit with family friends comes the reality that visits are pretty short if there isn’t a way for them to use a washroom if need be.  Homes that have no washrooms near the outdoor space, or even on the ground floor, are less practical for having visitors.

If your visitor can open a door and have easy access to a washroom inside the home, it is much more appealing than having them walk inside, up or down stairs to use the closest washroom.  If you have only a single washroom in your home, this is even more of a challenge these days.

#1 Privacy

With your home now not only your refuge from a dangerous world, but also your workplace and your kids’ classroom, the need for privacy is huge.  With multiple members of the family working or learning from home, open concept homes have dropped considerably in appeal.

Once unpopular, small, private spaces in the home are making a big comeback.  The ability to close a door and not have your family inadvertently interrupt a zoom call or do something embarrassing while you’re on speaker with your boss is now a must-have for many buyers.

If you’re interested in talking about the ways in which your home could be made more appealing to buyers (or just yourself!), then feel free to get in touch.  We’d love to chat about your situation and the way forward.