COVID-19 is not a problem that is solely affecting the United States and Europe. Canada is also suffering in every industry and aspect of society. Social distancing has caused everyone to become more isolated and buy fewer products. The real estate industry is no exception as less people are showing interest in buying and selling, especially in the Spring when sales are usually hot. Here are a few of the effects that the global pandemic has had on the Canadian real estate market.
All across Canada, the mortgage rates have dropped for millions of Canadian homeowners, thanks to the Bank of Canada. As many people cannot pay their monthly mortgages, the new prediction is that fewer people will purchase homes in Canada this year. Housing markets that used to be hot are now cooling down as the country’s economy comes to a standstill.
Virtual Tours vs. Open Houses
Open house tours are now closed throughout Canada as many people are forced to stay at home. Virtual tours are the new trends for realtors who are eager to attract buyers. Recently, more agents have become cautious and picky about which properties they choose to sell.
Expect a Recession
Spring is the busiest time to buy and sell property. Today, due to the COVID-19 pandemic, Canadian real estate agents are looking forward to a recession. They predict with the massive loss of jobs and fewer salaries, there will be fewer buyers. They add that job insecurity is a major reason for this downturn.
In 2019, home sales in Vancouver were up 44.9% while Toronto sales were up 45.6%. Spring is the busiest season for selling homes in Canada’s most populated cities. According to The Canadian Real Estate Association, the months of January and February showed the hottest sales before the coronavirus arrived. In February, home sales rose by 27% across the country, the first sign of busy performances.
By the end of 2020, thousands of people will return to work; however, thousands more will remain out of work. For this year, the prospects look grim for both buyers and sellers.
Not a Good Time for Sellers Either
Even sellers who are employed and ready to sell their homes are having a hard time. The top realtors tell their clients that it’s not a good time to list, but they are unsure of when the right time will be. Their advice is to hold tight until people leave their homes again, which is a few months from now. There is no clear indication of exactly when people will show interest in buying homes again.
A Global Recession Is Feared
Many real estate agents predict that local and national recessions will become global. An event similar to a recession took place in spring 2017. The Fair Housing Plan was introduced with a new tax provision that caused temporary cooling in the market. The negative effects of this plan lasted for two years until home sales began showing favorable increases.
A Fast Recovery Is Predicted
The flattening curves of the COVID-19 pandemic are appearing in the U.S. and Canada. Buyer demands are not changing, the supply of homes remains stable and many people still want to move to Canada. Realtors should expect to see their list of buyers increase soon. Once the health risks of the pandemic are overcome, some realtors predict that market activities will resume and recover soon.
The real estate industry is one of the best examples of how dramatically life changes during and after a nationwide disaster. During a crisis, millions of people will struggle to pay their mortgages, and thousands of real estate businesses will report losses. More agents are going digital to hold virtual meetings in place of having face-to-face interactions. Although the immediate effects of the pandemic are obvious, the long-term effects remain unclear. Even so, Canada’s real estate industry is expected to make a full recovery and lead the world in home sales.