How Has COVID-19 Changed the Face of Buying and Selling Real Estate?
When it comes to the real estate industry in Canada –it has proven to be very resilient.
While many analysts predicted that the COVID-19 pandemic could lead to a potential crash in the real estate market, that ‘crash’ didn’t really happen, in fact, the prices continued to climb up.
Though we have seen a rise in suburbanization and a long-term shift to remote work.
So, how exactly has the dynamics of the industry changed? In this blog, we are looking at the key factors that have impacted (and are continuing to impact) the real estate industry:
Real estate remains a priority for Canadians
There is no denying that real estate has always been important for Canadians. There is a general perception that homeownership is not only good for an individual but also has positive effects on the wider economy.
According to research conducted by Nanos Research for the Ontario Real Estate Association (OREA), the majority of Ontarians think housing is an important (60%) or somewhat important (32%) contributor to the provincial economy.
This is why real estate investment continued in 2020 and is likely to continue in 2021.
According to RE/MAX Canada, 2021 will see a healthy housing price growth, driven by move-up and move-over buyers. Prices will also continue to rise due to increasing demand and housing supply shortage.
A closer look at the residential real estate market
While things have remained positive, analysts have pointed out that other factors should also be considered.
The Housing Market Assessment (HMA), by CMHC, highlights that there are some imbalances in the market. For instance, the assessment detected moderate evidence of overvaluation at the national level, in the third quarter of last year, as well as in cities such as Victoria and Halifax.
In addition to these underlying imbalances, data also shows that while prices are likely to grow, the rate of growth may reduce.
In December 2020, for instance, the Teranet–National Bank National Composite House Price IndexTM was up 0.6% from the previous month.
Though, if the unsmoothed composite index was seasonally adjusted, it would be up 0.2% in December. This cooling from the advances of the previous two months suggests that the growth could slow further in the coming months.
A move outside the ‘big’ cities
With work from home becoming a norm, some homeowners are motivated to look beyond smaller condominiums in bigger cities to houses with more square footage and accessible green space outside city centres.
In fact, 35% of RE/MAX brokers shared that move-over buyers from other cities and provinces would be the ones that will continue to spark market activity in 2021
Condo market activity slowing down
COVID-19 pandemic has really impacted short-term rentals and led to a rise in remote work.
This is why the Canadian condo market is now facing uncertainty. According to Better Dwelling, while condo apartment prices will continue to witness gains, they are likely to underperform.
Royal LePage forecasts that a typical condo in Canada will cost $522,700 in 2021. This number is about 2.25% higher from the previous year but it is also almost half of the growth forecasted for the total of all home types.
These observations and trends show how the Canadian real estate market has evolved over the past year and is continuing to change as the economic situation changes.
No matter where the market heads, we will continue to provide individual property analysis as well as aggregate market intelligence to enable you to make informed decisions within shorter timeframes.
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