From minimizing sales to changing the way homes are being shown to the potential customers, the global pandemic is going to change the Canada real estate market on a short-term and long-term basis.
To claim that the series of events in the past few months have had an unparalleled effect on how the society is going to function, is going to be an understatement.
As the overall threat of the virus is growing across the world and even Canada, millions of residents as well as non-essential workforce in the country are now working from home.
Most of the individuals out there in the country are refraining from visiting business centers and other public places.
The real estate industry, particularly, serves to be a primary instance of the industry that is needed to drastically adapt the current norms until “business as usual” post-pandemic.
While real estate agents and brokerages are deemed as “essential services” in Canada, there are some key changes to the way in which agents are going to operate.
Still, it is not clear how the real estate market in the country is going to perform as the pandemic evolves.
Where are House Prices in Canada Heading?
With respect to the sharp drop-off in the overall sales in Canada real estate market in the recent few weeks, most of the players in the given industry are speculating what it implies to the house prices in the coming times.
At the start of the year, home prices in the Canada real estate market had started quite hot & trending. The rapid growth even threatened the red-hot levels of 2016 featuring the overall growth of 8.7 percent year-after-year. The given strength continued up until March.
The Real Estate Association in Canada reported around 15.2 percent year-after-year increase in the overall real estate prices during March. There were over 60 percent transactions in the local markets.
However, record unemployment rate and plummeting sales due to the pandemic are now posing major threats for dragging the given prices down.
An expert in the given field states that currently the real estate market in Canada has experienced around 5 percent drop across the nation in the overall house prices in the coming next months. The given statistics is based on the fact that there are going to be some forced sellers in the near term.
This is going to include those who have bought a new home already in Canada without selling the previous home.
The investors that were previously targeting the short-term rental scenario in the given industry are now experiencing steep hits to the respective incomes.
For the given part, the experts in the Canadian real estate market are expecting the average real estate prices throughout 2020 to be at par with that of the 2019 levels.
This is going to be determined by around 15 percent year-after-year growth that was experienced during the first quarter of 2020.
The experts also believe that there is going to be some degree of support for initially holding the respective buyers and sellers to go into a state of pause.
However, within the span of a few months, rising market illiquidity and increasing rates of unemployment are going to compel a rising number of experienced sellers to ensure price concessions.
It is expected that composite benchmark prices are going to fall briefly during the 2nd half of the year by around 2.9 percent on an average year-after-year. The rise of activities that was expected during 2021 is going to be tilted back towards the favor of the seller while swinging the price dynamics all around.
What to Expect in Large cities like Toronto and the Vancouver real estate market?
What the buyers and sellers can expect from the ongoing Toronto and Vancouver real estate market according to this website during and after the pandemic is quite uncertain.
Before the declaration of the global pandemic, the real estate market in Canada during spring was all set for ensuring a record-breaking sales season -particularly in large cities of Canada.
The Real Estate Association in Canada revealed that February turned particularly hot for the year-over-year real estate sales -rising to around 27 percent across the nation.
This indicated that the busy spring season of Canadian real estate market had started quite early. Although the pandemic put a rainfall to this, because many like the Ontario Government have mandated realtors are an essential service, it helps out the real estate market survive.
The same performance was analysed for individual areas like Vancouver homes for sale and Toronto. It was observed that the transactions rose by as much as 45.6 percent and 44.9 percent respectively for houses.
Even after the strong start to the spring real estate market conditions, we can now go for expecting a major slow-down in the market activity.
Buyers might now decide to hold off doing any home purchases amidst the situation of uncertain economic and health conditions.
At the same time, the sellers -having observed what other sellers had received during the last winter real estate month, would be highly hesitant to accept any kind of lower offer in the current scenario.
It is quite hard to forecast for how long the current virus is going to be a threat in addition to its threat and the overall impact on businesses, individuals, and the entire market. As far as the Canadian real estate market scenario is concerned, it is expected to bounce back on a long-term basis.
Due to the limited availability of inventory, in combination with the growing population in big cities like Ontario, it can be expected that market activity would resume eventually while recovering quickly once the health risks have been mitigated due to COVID along with the stabilization of the financial markets.
Having said that, as people are going to react as well as adapt to the current directives from the respective federal, provincial, and municipal governments, it can be expected that the real estate market is going to be impacted for long.
The overall price of the slowdown in the Canadian real estate market is not going to be the same in every place in the country. It is not just the real estate prices going down, as the overall construction of new homes might slow down to a crawl, it is forecasted that the housing sector could plummet.
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Adam Abbot says
Great article! I absolutely agree that it is difficult to forecast anything these days and home price fluctuations will depend on the region. I live in GTA and I’m looking currently to buy a new Paradise Developments home in Pickering. I have been thinking if it’s the right time to buy a new build house now. I think that there won’t be a drop in Prices in Toronto suburbs for the affordable housing sector, maybe just for luxurious homes. But we’ll have a more clear picture by the end of this year I think.