Real Estate During COVID-19: Update #2
The COVID-19 pandemic has many folks on edge and worried about the economy – and the real estate market, in particular. Here are a few things to consider:
We expect the economy to bounce back
If we can believe what they are saying, China is already starting to recover as COVID-19 gets more controlled. The Chinese government has started it’s own ‘stimulus’ plan, so if they can get some momentum going, that will help the world economy get onto the road to recovery. Add to that the huge stimulus package in the US – plus Canada’s, too – and we’ll see some serious money pumped into the economy, which should generate a strong recovery.
The housing market seems stable
The real estate market is still competitive, and multiple offer scenarios are still happening (although that may peter out as time goes on…). The Toronto Regional Estate Board (TREB) recently reported 8,012 home sales through TRREB’s MLS® System in March, 2020 – up 12.3% compared to 7,132 sales reported in March, 2019. That increase was based mostly on just the first two weeks of the month, meaning that if it wasn’t for COVID-19, this March would have been a really fantastic month for Toronto real estate. (Check out my blog for a more detailed breakdown of the March stats soon.)
With all the stimulus, financial supports, mortgage deferral options, etc., it’s unlikely that Canadians will start dumping houses, which would push prices down (as happened in the U.S. during the Global Financial Crisis). Plus, new home construction has declined a bit in recent years. Some believe that builders have been under-producing new housing stock. With the federal government tightening mortgage regulations at the same time, we can be reasonably confident that today’s homeowners (and buyers) are solid enough to get by. So, there’s not really much risk of either over-supply of housing stock *nor* of homeowners defaulting on mortgages, either of which could push market prices down. Because market fundamentals are generally strong, housing is a safe long-term investment, and should be able to weather this storm.
Furthermore, if this ‘quasi-quarantine’ is short, real estate will probably pick up speed quickly. Mortgage rates are at historic lows, meaning now is a good time to lock in a low-rate mortgage. Plus, we’ll have lots of that pent up demand in the real estate market. The bottom line is that, if you were planning to be active in the market this year, you should either be doing something now, or preparing to move fast when life starts to get back to normal.
‘Spring market’ delayed
Whenever things start to get somewhat back to normal, I expect the market to surge (i.e. sales to spike) to ‘catch up’ – if not by summer, then early fall. There will definitely be lots of pent-up demand, and that will likely lead to a hotter market at some point later this year.
Again, if you want to buy or sell this year, be ready – and for you home sellers, now is probably a good time to tackle a few projects around the house (or condo)!
Now is a great time to reach out
We’ve all heard it a million times by now, but it’s true: we can all help each other get through this! Support your friends and neighbours in ways that are responsible, safe and sanitary – while maintaining social distancing! 😉 Keep in touch with friends and family any way you can. Most of us are already doing it, but try to think of somebody you *haven’t* heard from recently, and reach out to say hi – it might make somebody’s day!