Springtime is usually when the housing market in Canada begins to heat up, but this year, things will undoubtedly be different. While it is getting warmer outside, the COVID-19 pandemic may keep the housing market in a deep freeze.
While it is too early to say whether or not the pandemic will have an effect on the Canadian real estate market over the entire spring and summer season definitively, a recent report by RBC bank analyst Robert Hogue predicts a significant pullback this year in property sales and purchases. Hogue’s report states that home resales could drop by 30 percent, which would be a 20-year low. Part of the reason for this dramatic drop? Social distancing measures and economic fallout.
“Canada’s housing market will slow to a crawl this spring as Canadians follow social distancing orders in order to combat the spread of COVID-19,”
the report says.
And there seems to be some merit in the report’s conclusions. Since the social distancing measures have been put into effect, there has been a sharp drop-off in market activity.
While some realtors in Ontario did report an increase in home sales in Ontario during the first two weeks of March compared to the previous year, the final two weeks of the month saw a steep decline. In some parts of Ontario home sales declined by as much as 33 percent when compared to the previous year.
According to Hogue’s report, in the near-term, home prices will likely stay stable, even as buyers and sellers pull back. The potential surge in unemployment and market illiquidity will result in some sellers making price concessions in order to liquidate their properties quickly. As a result, the cost of housing might go down once this period of self-isolation is over.
Hogue believes that the concessions sellers might have to make will not last long. He predicts that things will
“scale back in favour of sellers and swing price dynamics around”
sometime during 2021.
This means that while the pandemic will have an effect, things will eventually get back to normal.
There is a lot of uncertainty in the world right now, leaving many asking whether now is a good time to refinance, enter the market, or sell. Be rest assured that the experienced and knowledgeable mortgage brokers here at Clover Mortgage will have your back and keep you informed every step along the way during this turbulent time. If you have any questions, feel free to reach out at anytime.