Canada’s real estate market in 2020 had its fair share of records. The property market has been resilient throughout the last two quarters amidst the pandemic and successful in standing upright through the thick and thin. While we haven’t come out of the woods yet, Canadian households are overtly optimistic about housing, though medical experts say that a second wave of the deadly virus may probably sweep over the country.
The residential real estate market has been a saviour for Canada’s economy. Following the spring ravages of the pandemic, the real estate market sprung back into life riding on the huge pent-up demand that burst out in the open. Homes sold like hot cakes as Canadians thronged real estate portals to list their homes and buy new ones.
The abysmally low-interest rates add fuel to the fire as home sales records tumbled and real estate prices reached new highs on the backdrop of tight inventory.
Real estate prices have bucked pandemic concerns
Indeed, the market has defied expectations and provided a good deal of succour to the hopes of Canadians. The consumer confidence is at its peak, employment numbers are warming up and the home loans are affordable too. These pointers have helped offset the negative sentiments shoring up for quite some time.
The use of technology to kickstart home sales amidst the lockdown & social distancing measures have done real good for the real estate developers and helped the national average housing price in 2020 to increase by 4.6%.
The rental market felt the stab in terms of declining prices, something which the homeownership market was lucky to not face the brunt. Since interest rates were low and pent-up demand was strong, it didn’t let the prices to fall free.
Are Canada’s housing prices vulnerable?
But will the good times last long? Economists are of the opinion that home sales will peter out in the coming months and we will see a slowdown in the real estate market.
Cities such as Victoria, Halifax, Moncton are showing an ever-widening gap in home prices between expectations by price economists and the present selling price.
The over-supply of detached and semi-detached homes in many cities in Canada including Toronto, Calgary, Edmonton, to name a few, due to demand for open spaces have led to a decline in condo demand and prices. This has led to deep creases on the foreheads of real estate dealers bullish on condo sales.
The pent-up demand is almost exhausted, and we will see the summer momentum losing its mojo. Though this will shake up the prices in some markets of the country, it won’t lead to a major decline in prices.
The Canadian real estate market’s smooth return to normalcy is a testament to the fact that the market has strong fundamentals and can overcome obstacles with aplomb. The tapering unemployment levels and the confidence of homebuyers will help stimulate the market by bringing more homes on the market and plug the supply gap.
Overall, as the property market heads into 2021, we will see conditions to be more favourable and balanced, which will augur well for all Canadians.