In today’s blog post, we discuss the future of Canadian real estate. If I had a crystal ball, I would be a billionaire by now, but of course, I don’t! This is just my opinion on what the future holds for our Real Estate market. I get a lot of questions about what will happen when social distancing rules loosen and life returns to normal, so I decided to write about it.
Earlier this year, the market was on fire, and in most major cities such as Toronto, it was a sellers’ market and was projected to be a very busy spring market. But of course, as we all know, sales activity has cooled down significantly since the pandemic lockdown.
Here is my opinion on what we may be expecting to see in the coming months and years ahead.
Short-term
The Toronto Regional Real Estate Board (TRREB) projects that as social distancing measures loosen, real estate market activity will ramp up again. TRREB believes that once business operations return to normal and unemployment rates decrease, our economy will recover, which is expected to happen this Fall.
Homebuyers will have more financial power and will be more inclined to start their home search again. While sellers will feel more comfortable allowing people to visit their homes for open houses.
Relief Measures
The Canadian government has stepped in and created financial relief measures to help soften the impact of the coronavirus on the economy. These benefits have been implemented to reduce household debt as people navigate this challenging time.
The government has also stepped in to help businesses that have taken revenue losses or had to close their doors because of this pandemic. These financial benefits the government is providing could help keep people employed and in turn, encourage people to continue to engage in the Real Estate market.
Interest Rates
In the past, given the mortgage stress test and high interest rates, it was very hard for homebuyers, especially first-time home buyers to qualify for a mortgage. The good news is that the stress caused by these obstacles may be eased by recent interest rate interventions.
The benchmark interest rate has been significantly lowered to 0.25% and is supposed to stay at this rate. This is going to help boost the economy and help keep inflation stable. This is the lowest the rate has ever been. This is the time for first-time home buyers to get into a property that would allow them to have more affordable mortgage payments.
Make sure you first have job security before you go home shopping though!
Long-term
Data from the 2008-2009 recession caused by the housing crisis, show that the search volume for homes continued to increase through the years into 2010/11. This provides evidence that following the economic downturn, the market recovered at a relatively fast rate.
This can be promising data that can put people at ease that after the coronavirus pandemic, our economy is likely to rebound. Employment rates will increase since businesses will be able to operate fully again. As a result, household debt will decline because people will be able to afford to pay their bills.
We will likely see the market heat up again following this pandemic because there will be a lot of pent-up demand. This is my opinion, would be more than happy to answer any questions you may have!
