Traditionally, spring is one of the busiest times of the year for real estate. And at the beginning of this year it seemed like that would be the case once again. But the coronavirus outbreak—and subsequent stay-at-home orders—changed all of that. It was a shock that reverberated around the world, and led many buyers and sellers to put their moving plans on hold. In April, sales volume fell to its lowest level since 1984, according to the Canadian Real Estate Association.¹  And while this was based on national data, factoring in market statistics from coast to coast, even our own strong local markets in Kitchener, Waterloo, Wellington and Haldimand mimicked this abrupt change.

And yet, while sales volume had fallen in April, prices remained stable. The average home price in April was down just 1.3% from the same month last year. And keep in mind, that was a national average.¹  In many metropolitan areas, some of our local markets included, prices have actually continued to rise. The Teranet–National Bank Composite House Price Index, which measures 11 major Canadian markets, showed home prices in April were up 5.3% from a year earlier.²  That's an amazing statistic given the coronavirus hit on our economy and collective psyche.

So what does that mean for you and I? Well, given the ongoing concerns for personal safety, and the current economic climate, a careful consideration of the information is prudent. Nobody has a crystal ball. And everybody's situation is somewhat different. So the real question to be asked is this: Is it prudent for ME to jump back into the real estate market? 

Before you decide, take some time to consider where the housing market is headed, how the real estate process has changed, and how your own individual needs and circumstances may be different going forward. Here are some of our ideas on these matters that may be of help to you:

In response to the economic slowdown, the Bank of Canada has slashed interest rates.³ That’s good news for homebuyers who have struggled to afford a mortgage in the past. Lower mortgage rates can bring down monthly payments or increase a buyer’s purchasing power while making it easier to qualify for a loan.

And at a recent press conference, the Bank of Canada Governor Stephen Poloz told reporters that interest rates would likely remain low for the foreseeable future. He also noted that the country is on track to meet the central bank’s “best-case scenario for recovery” as outlined in April, and he didn’t predict damage to the economy would be as “dire” as some have speculated.⁴

While many buyers are eager to take advantage of low mortgage rates, some wonder if recessionary pressures could drive down home prices, too. Economists at CMHC (the Canada Mortgage and Housing Corporation) predict that prices will decrease over the next 12 to 18 months.⁵  However, many other analysts, ourselves and other real estate industry veterans included, expect supply and demand fundamentals to prevent a drastic drop in home values.⁶

There’s been a shortage of affordable homes on the market for years, and that inventory shortage has helped to prop up prices—even as sales have slowed. That’s because supply and demand have fallen at around the same pace.⁷  Of course, some market segments have fared better than others. For example, demand has softened for urban investment condos in major centres like Toronto, which has caused some prices to drop. And yet in many other areas the supply of single-family homes continues to be extremely tight, leaving too many eager buyers left to compete for too few listings.⁷

That said, there remain some attractive opportunities in all segments of the marketplace for astute buyers and sellers. The key word here is "astute". For now more than ever, it’s crucial to be using the services of a highly knowledgeable professional real estate agent who understands your local market dynamics and can help you assess the critical factors to be taken into account when buying or listing your home.

The more we learn about the coronavirus, the more we understand that the safety of our clients and team members needs to remain a top priority. That’s why we’ve developed a process for buyers and sellers that utilizes technology to minimize personal contact.

For our listings, we’re holding online open houses, offering virtual viewings, and conducting walk-through video tours. We’re also using video chat to qualify interested buyers before we book in-person showings. This enables us to promote your property to a broad audience while limiting physical foot traffic to only serious buyers.

Likewise, our buyer clients can view properties online and take virtual video tours to minimize the number of homes they step inside. Ready to visit a property in person? We can decrease surface contact by asking the seller to turn on all the lights and open doors and cabinets before your scheduled showing.

The majority of our “paperwork” is also digital. In fact, many of the legal and financial documents involved in buying and selling a home went online years ago. You can safely view and eSign contracts from your smartphone or computer.

While these new ways of conducting business may seem strange at first, keep in mind, many of our repeat clients, commercial clients,  international buyers, and others have utilized virtual methods to buy and sell homes for years.

The reality is, there’s no “one size fits all” when it comes to knowing whether it’s a good time to buy or sell a home. This is something that everyone needs to assess for themselves, because of course, each circumstance is different and unique. But knowing the state of the market and what to expect when shopping for real estate is a sound springboard from which to make wise decisions. Consider the following questions:

Why do you want or need to move?

It’s important to consider why you want to move and if your needs may shift over the next year. For example, if you need a larger home for your growing family, your space constraints aren’t likely to go away. In fact, they could be amplified as you spend more time at home.

However, if you’re planning a move to be closer to your office, consider whether your commute could change. Some companies are rethinking their office dynamics and may encourage their employees to work remotely on a permanent basis.

How urgently do you need to complete your move?

If you have a new baby on the way or want to be settled before schools open in the fall, we recommend that you begin aggressively searching as soon as possible. With fewer homes on the market, it’s taking longer than usual for clients to find and purchase a home.

However, if your timeline is flexible, you may be well-positioned to score a deal. We’re seeing more highly-incentivized sellers who are willing to negotiate on terms and price. Talk to us about setting up a search so we can keep an eye out for any bargains that pop up. And get pre-qualified for a mortgage now so you’ll be ready to act quickly.

If you’re eager to sell this year, now is the time to begin prepping your home for the market. Prices could fluctuate, and experts predict a second wave of infections may necessitate another lockdown.⁸ If you wait, you might miss your window of opportunity.

How has your particular market segment been impacted?

Certain segments will weather this economic downturn better than others. It’s important to understand the market dynamics of your particular area, price point, and housing type. The truth is, broad macroeconomic projections rarely paint an accurate picture of the day-to-day market realities of a given neighbourhood.

How long do you plan to stay in your new home?

During times of market uncertainty, your best bet is to buy a home you can envision yourself keeping for several years. Fortunately, with decreased competition and ultra-low mortgage rates, you’ll be well-positioned to score a great deal.

Is your income stable?

If there’s a good chance you could lose your job, you may be better off waiting to buy a home. The exception would be if you’re planning to downsize. Moving to a less expensive home could allow you to tap into your home equity or cut down on your monthly expenses.

While uncertain market conditions may give pause to some buyers and sellers, they can actually present an opportunity for those who are willing, able, and motivated to make a move.

Your average spring season would be flooded with real estate activity. But right now, only motivated players are out in the market. That means that if you’re looking to buy, you’re in a better position to negotiate a great price. And today’s low mortgage rates could give a big boost to your purchasing power. In fact, if you’ve been priced out of the market before, this may be the perfect time to look.

If you’re ready to sell, you’ll have fewer listings to compete against in your neighbourhood and price range. But you’ll want to act quickly—a second wave of coronavirus cases could be coming later this year. Ask yourself how you will feel if you have to face another lockdown in your current home.

Let’s schedule a free virtual consultation to discuss your individual needs and circumstances. We can help you assess your options and create a plan that makes you feel both comfortable and confident during these unprecedented times. Our office contact information is at the bottom of this page. 

The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

Sources:

1. CTV News -
   https://www.ctvnews.ca/business/canadian-home-sales-fall-to-record-breaking-36-year-low-1.4940984

2. House Price Index -
   https://housepriceindex.ca/2020/05/april2020/

3. CBC -
   https://www.cbc.ca/news/business/bank-of-canada-interest-rate-1.5512098

4. Financial Post -
   https://business.financialpost.com/pmn/business-pmn/bank-of-canada-governor-says-interest-rates-will-probably-stay-low

5. Canada Mortgage and Housing Corporation -
   https://www.cmhc-schl.gc.ca/en/media-newsroom/speeches/2020/supporting-financial-stability-during-covid19-pandemic

6. RE/MAX -
   https://blog.remax.ca/no-nosedive-ahead-for-canadian-real-estate-prices-re-max/

7. Global News -
   https://globalnews.ca/news/6943727/coronavirus-housing-market-good-time-to-buy/

8. CTV News -
   https://www.ctvnews.ca/health/coronavirus/the-second-wave-will-come-and-experts-say-canada-is-not-prepared-1.4948733