What the Real Estate Market Will Look Like When COVID Ends
It may seem tough to think about right now, but there will be a day when COVID-19 is no more. Whether it’s through a vaccine or flattening the curve, life will get back to normal (or semi-normal) eventually. That begs the question, what will the real estate market look like when COVID ends?
Not surprisingly it depends on who you ask. There are always going to be housing bears out there that predict the collapse of the Canadian real estate market. But those housing bears have been predicting that for years and so far the Canadian real estate market is still standing.
The Canada Mortgage and Housing Corp. (CMHC) is predicting that real estate prices won’t return to pre-recession levels until late 2022 at the earliest. The crown corporation did admit that coming up with a reliable forecast is tough because there are so many unknown variables, such as how quickly the employment market will recover and the timing of future immigration.
That being said, it’s important to take what the CMHC is predicting with a grain of salt. The CMHC is a crown corporation. It’s their job to be pessimistic and risk adverse, so the CMHC saying it will take until 2022 for the real estate market to recover is probably one of the more pessimistic forecasts out there and may vary from what actually happens.
What we do know so far is that home sales dropped sharply in Canada’s largest real estate market Toronto. Home sales were down 67 percent in April, as social distancing and uncertainty about the economy put a damper on the spring real estate market. Meanwhile, home prices were also down; however, it wasn’t as much of a steep drop. Home prices were down 11.8 percent in April in Toronto compared to March.
History isn’t always the best predictor of the future, but let’s for a moment go back to the 2008-2009 recession. Although the Toronto real estate market did slow down a little, it came out from the recession relatively unscathed. Will it be a repeat of that story this time around for Toronto and other Canadian real estate markets? Only time will tell.
At all depends on how long the lockdown is in effect. If we do a good job of flattening the curve this summer, although we probably won’t get back to the “old” normal, it’s quite possible that we could see the demand from the spring real estate market being pushed ahead to the fall like some have predicted.
All of this pent-up demand could translate into a busy fall real estate market. But that will only happen if Canadians regain their confidence in the economy. With one million Canadians losing their jobs in March and likely more job losses to come, it will be interesting to see how long it takes for that pent-up demand to actually translate into home sales.
What I do know for sure is that the home buying experience will be quite different post-COVID lockdown. Hygiene and cleaning will be very important. Realtors will have to get creative with stuff like virtual tours if they hope to drum up interest from homebuyers.
It will be an interesting few months that’s for sure. Whether you’re looking for a home now or you’re planning to in the fall, happy home hunting, wash your hands and stay safe!
Written by Sean Cooper Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. Sean’s helping others with their mortgages as an independent mortgage broker. Get in touch with him for all your mortgage needs. For a free mortgage consultation, email Sean@BurnYourMortgage.ca or call 647–867–3711.