Last Updated on January 24, 2024 by CREW Editorial
How the COVID-19 pandemic is shaping Canadian real estate
At the onset of the COVID-19 pandemic, many people thought that the housing market would cool down. However, the coronavirus pandemic has done the exact opposite and caused house prices to soar amidst a lack of homes for sale. The pandemic has changed the landscape of real estate in Canada and has impacted the way we view homeownership in today’s market.
Taking advantage during COVID-19
With more people working from home, buyers aren’t looking to buy homes that are specifically close to work. This means that people are purchasing property outside of big cities and looking for potential homes in smaller towns. This is opening up vacancies in larger cities due to available housing options. However, the prices of homes have steadily increased in these areas instead of declining.
The other main factor is that people are actually spending more time in their homes. Since people have the option to work from home, they’re noticing a lack of space or are realizing they’re just not happy with the property they chose to buy or rent. This has increased demand for homes with lots of space (particularly space for an office) and a need for public transit to accommodate those working in the big city.
In addition, tenants are looking to move on from rental properties and find their next home. With a lack of in-person open houses, this could have been tricky. However, the pandemic has brought a host of online options for people looking for their next property, or looking to sell their pre-pandemic home. As a tenant, it’s important to have homeownership goals, and there are various programs offered by the Canadian government to help first-time homebuyers based on their income.
But commercial property and home sales have boosted during COVID-19, according to agents. This could be due to a variety of factors that increase demand and make homeownership a more viable option for people living in Canada.
Lowered interest
One of the biggest changes to the real estate landscape is that interest rates hit an all-time low during the pandemic. For those looking for long-term investments, or even their first home, this was really good news. You could get a mortgage and not have to pay a ridiculous amount of interest on the money that was lent to you which could positively impact your financial situation.
Fewer options
During these unprecedented times, residents aren’t really selling their homes, especially at the beginning of the pandemic, when people thought the housing bubble was going to burst. The amount of properties for sale has lowered options for prospective buyers in the Canadian real estate market. With fewer housing options comes fewer home sales and the opportunity for a post-pandemic boom.
Higher prices
Higher prices may be related to lowered options during the pandemic. This upward trend is a sign of the need for single-family homes in Canada. The average home price in the country is currently just over $678k and could grow as much as 16% according to Global News. This means buyers will have to have a sizeable down payment to remain competitive in the market.
Buying during a pandemic
If you’re looking to purchase your first home or an investment property during the coronavirus pandemic, there are a few things you can do to become competitive and remain optimistic. Luckily, the real estate market has shifted to accommodate social distancing and other safety measures during these unprecedented times to make viewing and purchasing easier than ever.
Virtual tours
More realtors are offering virtual tours to minimize contact. Virtual tours are becoming the way of the future as it allows people to view more than just a floor plan. These tours allow you to walk through multiple properties a day, which can help people narrow down what they’re looking for in a home. The real estate industry is pivoting to a more digital landscape and is making use of technological advances to increase home sales volume. However, this doesn’t diminish the need for real estate agents or other industry professionals.
Working with real estate industry professionals
Working with agents and realtors can really help you have a competitive edge when you’re looking to purchase a residential or commercial property. These experts can provide you with the knowledge that’s necessary for you to make an informed decision when purchasing a property during the coronavirus pandemic. An agent can help find current listings that reflect what you’re looking for in a space or a great investment opportunity for someone looking to rent their space to tenants.
Prepare for a bidding war
Buyers have to be willing to offer a sizeable down payment on their future home in order to get the property they want (and we know that’s easier said than done). Across Canada, prospective buyers are often subject to bidding wars and losing out on prime real estate because they aren’t competitive enough. Working with agents and mortgage brokers could help future homeowners by creating a sales plan that includes preemptive action and changes should there be a bidding war for a specific home.
Post-pandemic real estate market
The real estate market might not ever return to its pre-pandemic state. COVID-19 is a global crisis that is affecting every person in the world. Realtors and owners are feeling the crunch of the crisis. The opportunity for investment is endless with the news of vaccinations. Another key factor a change in the market post-pandemic is the influx of foreign investors once the border is open again.
Once travel is allowed again, and investors from international markets are allowed to purchase a house, Canada will see an economic boost related to real estate investment. Investors are realizing how important it is to see the potential in real estate investment opportunities, including commercial properties. However, millennial Canadians seem to be jumping on the opportunity to invest in the real estate industry by purchasing their first family home.
Millennials and the market
If there’s one group that’s benefitted from the work-from-home lifestyle and current global crisis – it’s Canadian millennials. While the majority of millennials still rent, some are looking to get a mortgage and purchase their first long-term house. Millennials are becoming the majority of clients for modern real estate agents as they’re gaining financial stability and looking to grow and start families.
Since millennials are well versed with the digital worlds, they’re able to navigate online real estate management websites and choose an agent they prefer, or property that meets their individual needs. They can find that house with a basement office or recreation space and no longer be tenants in a landlord’s world. Many millennials have their down payment already (whether from saving or requesting help from family members) but are waiting for a sign that this is the right opportunity for them.
It’s also savvier for millennials to own houses due to the financial restrictions of monthly rent payments or condo management fees. Millennials who can qualify for a reasonable mortgage during the COVID-19 pandemic should definitely take advantage of the real estate market and low-interest rates before the market becomes oversaturated. They should take the opportunity to no longer be a tenant, and become the latest homeowner on their Facebook feed.
The ever-changing real estate industry
It should come as no surprise that real estate in Canada is evolving into a massive, unstoppable force. If a global crisis couldn’t cool down the real estate industry, it’s likely nothing will. Next year we’ll see even higher demand for homes across the country from the public. There’s already data that suggests the impact of the pandemic will lead to higher home prices than ever seen. We’re already breaking economic records according to the latest data and clients are lining up to work with realtors more than ever.
Remember that markets fluctuate, but change on a scale like we’ve seen in the last decade is unprecedented – much like the era we’re living in! COVID-19 has changed everything so much, and housing is no exemption. Since the onset of COVID-19’s stronghold on the world, commercial and residential units have been harder for tenants to find. But sellers are waiting for the dust to settle to get into a long-term selling commitment or taking out another mortgage.
A market shaped by a virus
It’s no secret that the world will be forever changed by the COVID-19 crisis. Having a plan that adapts to the changing times is important going forward with any real estate purchase in the future. For investors, now is the best time to get into purchasing real estate as the value is slated to grow dramatically over the next year. If you’re able to read online about how certain agents and home sales work, it would be in your best interest.
Doing your research before any investment endeavour is a crucial part of being a smart investor. The real estate landscape has changed dramatically because of COVID-19 safety restrictions and safety measures. We may not even get back to a pre-COVID market, and online tours and zoom meetings with realtors might stick around for the foreseeable future. The best thing we can do is be resilient and try to adapt to the current global crisis as it happens. We need to change our program based on the way our top health officials see fit.
Economic recovery post-COVID
One thing is for sure, the real estate game in Canada will drive economic recovery following COVID-19. Mortgage management companies will see an influx of people looking for affordable options once travel restrictions are lifted and the border is open again. As the world reopens, we’ll see signs of things returning to normal and we’ll see people thriving amidst new beginnings. Thankfully, the digital world has kept the market afloat since we’re using modern technology in ways we’ve never conceived before.
People can work from home, have birthday parties, watch a movie and purchase real estate thanks to technological advances. It’s important to remember that one hundred years ago, during the Spanish Flu, people weren’t as lucky. The potential for people to buy real estate during these times was unthought of. In today’s day and age, during a modern health crisis, we’re adapting pretty well – all things considered.
As a nation, we have to look out for the best interest of our residents in the future. We must plan for economic recovery, and amplifying our real estate is a big part of increasing options and demand. Whether that means trying to cool down the market, or working to see it rise to new, unthought-of heights, is yet to be seen. But the bottom line is, if Canadians and investors can take advantage of the COVID crisis, they should.
Once everything is said and done, we’ll see the roaring twenties of the 21st century. Commercial and residential real estate will be rampant and buyers could benefit from an oversaturated market. It’s important to remember that many sellers are holding out on listing their assets until the pandemic is over, so there will be more options once this is all over.
Looking for a property to purchase can be daunting, but keeping these factors in mind can help you make an informed decision when you’re ready to purchase real estate. Taking advantage of low-interest rates, utilizing agents and preparing for bidding wars are key components to getting the property of your dreams in today’s day-and-age. It just takes a little creativity, and the end of a global health crisis, to help you reach your homeownership goals.
