It’s a halting realization to comprehend that just 6 short weeks ago, our economy was bustling and moving at a steady pace isn’t it? Due to the pandemic and in some cases, lock-down measures, there have been profound impacts on the economy as a whole.
One market that was impacted directly was the Real Estate and Housing market. While Real Estate Services have been deemed an essential service here in BC, there are still questions and uncertainty as to how the Canadian Housing Market will fare amid such a crisis. No one can be 100% certain on how the market will shift, but here is an overview of what experts feel might happen.
REAL ESTATE IN GENERAL…
Due to increased consumer confidence and an increase in demand by millennials and young couples, the start of 2020 saw healthy gains within the real estate market. The Canadian Housing Market Outlook indicated that this year would have been a strong year for Real Estate.
However, the second part of March showed a significant slow-down in the market, and April stats so far indicate that the market is slowing further. The Canadian Real Estate Association Stats show the following:
“National home sales fell 14.3% on a month-over-month (m-o-m) basis in March, the first national indication of the early impact of social isolation. The economic disruption and massive layoffs caused both buyers and sellers to increasingly retreat to the sidelines over the second half of the month.
Transactions were down on a m-o-m basis in the vast majority of local markets last month. Among Canada’s largest markets, sales declined in the Greater Toronto Area (GTA) (-20.8%), Montreal (-13.3%), Greater Vancouver (-2.9%), the Fraser Valley (-13.6%), Calgary (-26.3%), Edmonton (-13.2%), Winnipeg (-7.3%), Hamilton-Burlington (-24.9%) and Ottawa (-7.9%).”
In terms of new listings, the number of new listings declined by 12.5% in March compared to the prior month. This is expected to drop more in the upcoming weeks as sellers may opt to take current listings off the market and put home sales on hold for the time being.
Finally, in relation to Home Prices, little changed and most of the impact on housing prices is predicted to take a little while longer to become apparent. To view the full MLS price index, you can click HERE.
WHAT IT MEANS…
According to Robert Hogue, Chief Economist at RBC, we can expect the following:
- Housing activity will resume once the health crisis comes under control and authorities lift containment measures. The timing and speed of the recovery is uncertain at this point. We’re currently penciling in early-summer as the restart date. We think the recovery will come in stages—taking buyers up to a year to regroup and rebuild confidence amid high unemployment. Based on these assumptions, we project home resales to dive by nearly 30% this year in Canada to a 20-year low of 350,000 units.
- Property values have received strong support from tight demand-supply conditions in the majority of markets since mid-2019. We expect some degree of support to hold initially as both buyers and sellers go into hiatus. Lower interest rates, governments’ financial help to vulnerable Canadians and banks offer to defer mortgage payments will provide some downside protection.
- We see the outlook improving markedly next year in most markets. Exceptionally low interest rates, strengthening job markets and bounce-back in in-migration will generate substantial tailwind. We project home resales to surge more than 40% to 491,000 units in 2021.
These view-points echo the same bottom line: Although 2020 will feature a drop in Real Estate activity, it is expected to rebound in the fall of 2020/spring 2021 will bring balance and renewed strength to the market.
No matter what happens in the Real Estate industry, we at GLM Mortgage Group want to continue to be there for you and continue to help you in any way we can. We have a full list of available financial and economic relief available to you by clicking HERE. We also have a variety of resources available on our COVID-19 relief page—we invite you to view them and please reach out if you have any further questions for us.