The global pandemic may have brought the Canadian real estate sector to a near standstill this spring, but over the longer term it appears to have stoked homebuying intentions.
For many Canadians, finances are just one part of the story, and the decision to buy a home often goes beyond the dollars and cents. To put it simply, people need to make changes in their lives and move—regardless of whether there is a pandemic or not. Get local with market data - Get hold of a REALTOR®
When you’ve made the decision to move forward with a home search, you’ll likely (and should!) turn your attention to how the housing market is performing. After all, buying a home is a major personal commitment, and also one of the biggest financial investments most people will make.
With everything going on, in addition to sales updates from national and local real estate boards, a number of Canada’s most established financial institutions, economists and housing corporations have attempted to predict the size and duration of the impact of COVID-19 on the housing sector.
Expectedly, no two forecasts are the same, and this goes back to how unprecedented COVID-19 is. For example, the Canada Mortgage and Housing Corporation (CMHC) predicted the housing market will see a historic recession in 2020—with sales volumes dropping between 19% and 29% and prices declining between 9% and 18% from pre-COVID levels. On the other hand, TD Bank’s late-April report noted home prices in Toronto could rise 8% by year end.
While high-level data from real estate boards and financial institutions can provide valuable perspective on how the housing market is performing at the macro-level, real estate is hyper-regional, and in many respects, local. The type of property, the neighbourhood you’re interested in, and your budget will all play a role in the level of competition you’re likely to face and ultimately the price you can expect to pay. For example, high level data shows that real estate is quite competitive in several areas of Southern Ontario, as noted. Within these markets, however, the first-time buyer category in particular—where homes are priced under $700,000—is the busiest, whereas competition for homes at higher price points is a lot calmer.
Working with a real estate agent you trust is one way to cut through the noise and understand how far your dollar will go in real estate based on your situation and your needs. A good real estate agent acts as a trusted expert who can provide you with the facts, data and insights that are most relevant to your purchase decision, so you can make an informed choice that you are comfortable with now and in the future.
Ask prospective agents questions like, “How well do you know this area?” and “How many homes have you helped sell or purchase in this area in the last year?” to get a gauge on their local expertise. Asking how much of an agent’s business comes from referrals is also a good way to understand how successful they are.
Remember that real estate is a long-term decision
Finally, remember that real estate is a long-term investment. If you are looking to make short term, speculative investments, this is a particularly risky time to do that in real estate (and otherwise). Further, churning real estate has real costs that eat into any sale price, which include but aren’t limited to land transfer taxes, realtor professional fees and moving costs.
Once you’ve carefully weighed your personal needs against your financial appetite and obligations, and have also considered the context of the real estate market in your area, take the plunge if you’re confident that everything lines up. If you can buy and hold for the long term, there are some great pockets of opportunity out there.
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