Many Canadian real estate markets kicked off 2020 in a seller’s market, primed for a busy spring season characterized by high demand and low housing inventory. Canadian real estate prices were on rise. Even as late as mid-March, Canada’s biggest housing markets were still seeing a flurry of activity. Toronto home sales were up 50 per cent year-over-year, while Vancouver reported a similar trend with high demand, multiple offers and steady sales.
Then, social distancing measures kicked in and activity dropped off, as many homebuyers and sellers put pause to their plans. Economic uncertainty and a dramatic change in how a transaction could even be completed during this unprecedented time put a big question mark on the Canadian real estate market.
The industry as a whole has been very resilient, with Realtors adopting new technologies and creative ways to transact safely. The big question now is, what will happen to Canadian real estate prices in the coming weeks and months? Real estate market conditions are local, and will be impacted differently depending on a number of unknowns, including:
- How long will job losses and the ripple effects continue?
- How long will it take for consumers to start spending again?
- When will there be a vaccine for COVID-19?
“This will not be the end of real estate, and will certainly not be a direct major issue to real estate price trends. The largest and biggest issues will be from secondary factors months down the road.” – Stephen Young
Statistics Canada reported the latest unemployment numbers, which soared to 13 per cent in April. While some of these layoffs are temporary, many businesses face permanent closures that will impact consumer activity and the housing market.
The federal and provincial governments have implemented a number of measures to help Canadians who have taken a financial hit. Mortgage deferrals are also being offered to existing homeowners who are struggling to make their mortgage payments. For those who are still looking to enter the market, the Bank of Canada has dropped its interest rate to a record-low 0.25 per cent, making this a good time for those who have job security and cash on hand for a down payment.
Delisted Properties: An ever increasing trend all across the country is the process of home owners stopping the selling process and Delisting their properties and waiting on the sidelines until further clarity and safety is brought to the marketplace. The biggest issue with the Delisting of homes is that it greatly skews the numbers, and forces the supply side down dramatically, pushing the demand side even higher in some local markets. Delisted property owners are still owners who want to, and sometimes, have to sell, and those numbers are not being reflected in the marketplace.
The actual impacts of COVID-19 on Canadian real estate remains to be seen. Until some of these questions are answered, many will continue to take a wait-and-see approach in they don’t have to buy or sell a home at this time.