Canada’s real estate was off to a flying start in 2020. Greater Toronto Area (GTA) residential real estate properties of over $1million logged in a phenomenal 107% year-over-year in January and February while luxury real estate properties surged 75% during this period.
Realtors in Canada could have asked for nothing more spectacular-a red-hot spring market. Steady gains in the Canadian economy, a robust labor market and low unemployment rates, reflected in the significant surge in conventional and luxury real estate activities in cities like Montreal, Toronto, Vancouver and Ontario.
The rebound of the Canadian real estate market in the first two months of the year was a testament to the solidifying market fundamentals of the property sector. This new-found wave of confidence from homebuyers buoyed the expectations of developers and realtors of Canada, who were upbeat about big gains as they headed into an exciting month of the lucrative spring market.
Alas! Those expectations took a dent as the global coronavirus pandemic landed on the shores of Canada and proliferated rapidly across the country. The real estate market took note of this invisible enemy but continued to operate normally. It seemed that Canada dodged the coronavirus bullet to some extent. But as weeks passed, that normalcy has changed.
Social distancing and enforcement of quarantine measures have set the stage for an unpredictable spring selling market in Canada. To quell the fear of homebuyers in the event of this virus outbreak, the Bank of Canada cut interest rates thrice.
This proved to be a silver lining for homebuyers amidst the gloom and doom. Homebuyers can aim at more premium homes as they have the flexibility to borrow more.
Realtors, on the other hand, seemed to have allayed the panic and are betting on a good season as the demand for homes is on the rise. An industry that thrives on physical meetings and transactions is going digital and leveraging the big advances in technology like 360 virtual video tours and 3D capabilities. Digital signatures have also come to the fore and real estate transactions have gone paperless. The good news-homebuyers are buying this new shift and sellers are getting excellent visibility on their listings.
In the light of this transition in Canada’s real estate, let’s talk about why investing in properties is still an attractive proposition, despite the virus outbreak.
- Real estate is the best investment: Studies have shown that real estate, apart from being less volatile is a tangible asset, offering good capital appreciation year-over-year. If you take a glance at the chart, it shows that since 2006, most of the succeeding 14 years had an excellent growth record; which means that in spite of economic downturns, the real estate sector has bounced back in a dramatic fashion. Just look at the dip in the chart during 2008-09, where economic recession tamped down the year-on-year home sales to 32%. Fast forward to 2020 and home sales toppled all previous known records.
- Low interest rates: That sounds like music to the ears, isn’t it! With the Bank of Canada slashing rates thrice, taking the rates from 1.75% to a mere 0.25%, it’s a golden chance for homebuyers to lap up a premium property by borrowing as much as possible. For those who are keen on investing in a property now, they can enjoy an appealing variable rate on their mortgage loan.
- Bidding and house-hunting still on: The surge in real estate sales during January & February has continued into the spring season and serious homebuyers are mulling different options to grab a property amidst the coronavirus scare. Bidding wars are going on in Canada’s real estate market as demand is high and supply is tepid. Moreover, real estate agents are dishing out alluring, once-in-a-time offers that can go well with low mortgage rates.
The real estate market is feeling the jitters compounded by the coronavirus pandemic. Though low interest rates have buoyed home buyers to invest in properties, the response has been not that great. There is immense potential though in the market which is evident in sellers putting up listings online and conducting virtual property tours to drive sales.