Traditionally, spring is one of the busiest times of the year for real estate. But the coronavirus outbreak—and subsequent stay-at-home orders—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
However, while sales have fallen, prices have remained stable. Nationally, the average home price in April was down just 1.3% from the same month last year.1 And in many metropolitan areas including Hamilton-Burlington, prices have 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
Despite the stats, given safety concerns and the current economic climate, is it prudent to jump into the real estate market now?
Before you decide, it’s important to consider where the housing market is headed, how the real estate process has changed, and your own individual needs and circumstances.
WHAT’S AHEAD FOR THE HOUSING MARKET?
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, 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 the Canada Mortgage and Housing Corporation predict that prices will decrease over the next 12 months.5 However, many real estate industry veterans 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 condos in some areas, which has caused prices to drop. Whereas, the supply of single-family homes in many neighbourhoods has dried up, leaving eager buyers to compete for listings.7
There are certainly opportunities out in the marketplace for both buyers and sellers. But now more than ever, it’s crucial to have a professional real estate agent who understands your local market dynamics and can help you assess the best time to buy or list your home.
HOW HAS THE REAL ESTATE PROCESS CHANGED?
The safety of our clients and our team members is our 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? To decrease surface contact sellers are asked 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 out of town buyers and others have utilized virtual methods to buy and sell homes for years.
IS IT THE RIGHT TIME FOR ME TO MAKE A MOVE?
The reality is, there’s no “one size fits all” answer as to whether it’s a good time to buy or sell a home because everyone’s circumstances are unique. But now that you know the state of the market and what you can expect as you shop for real estate, 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. There may be some 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. Most importantly, 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.
WHEN YOU’RE READY TO MOVE—I'M READY TO HELP
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. Right now, 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.
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.
- CTV News -
- House Price Index -
- CBC -
- Financial Post -
- Canada Mortgage and Housing Corporation -
- RE/MAX -
- Global News -
- CTV News -