The Canadian housing market outlook for 2020 started strong. Ontario, the country’s most highly populated province, continues to attract homebuyers. While the the coronavirus pandemic may shift this expectation in the short-term, the market will rebound quickly.
Toronto real estate has favoured sellers for some time now, with growing demand and low inventory creating a perfect storm for rising prices. TREB reported a flurry of activity in early March, with homeowners listing their properties in anticipation of another busy spring real estate season.
Meanwhile, buyers faced the ongoing challenges of affordability and stiff competition. Those who were planning a move had already likely bought their new home before listing their existing one – a common practice when inventory is low and competition is stiff.
Then the pandemic hit, social distancing bylaws took effect and the world as we know it changed. Well, not everything changed. Those who had already purchased their new home still had to sell. With a busy spring predicted for Toronto & the GTA real estate prior to the pandemic, many were already waist-deep in their transaction.
Realtors had the chance to sit down with a recent homebuyer/seller who, under these very circumstances, experienced the “virtual deal.”
Here are some current factors that determine real estate prices:
The Bank of Canada has reduced interest rates to 0.25%, from 1.25%.This new rate will stimulate more demand in the market to help lift the economy. However, low inventory will cause price increases, since sellers will want to get the best possible price.
The positive is that homebuyers are able to borrow more money at a reduced rate. This could lead to huge cost savings over time for buyers.
Some first-time buyers were challenged in entering the market previously due to the mortgage stress test. However, the lower interest rate can help buyers qualify for a mortgage and buy a larger or better home in areas outside of the Greater Toronto Area (GTA), which are more affordable.
Great News for Buyers
Finally, a silver lining to COVID-19 mark on the markets: if financially possible, it can be a great time to buy a home with interest rates being the lowest we have seen.
In response to the viral outbreak, banks worldwide have been cutting interest rates. The Bank of Canada cut the interest rate for Canadians by a full percentage point in March 2020. As a result, prospective home buyers looking to get a mortgage can now expect to borrow at a decreased rate. With fixed term mortgage rates also on the decline, home buyers have the flexibility to borrow more and aim for a higher home price or get a better mortgage rate and have less expensive mortgage payments.
So, with buyers in a good position to buy, how are real estate agents helping to make home sales happen, particularly in the wake of temporary social distancing?
Leverage Technology for Real Estate!
Big advances in technology have ignited a fundamental shift in the real estate industry, and it is now easier than ever to gain a wealth of knowledge about a home, condo, townhouse or any listing from the online listing alone.
Floor plans, detailed descriptions, panoramic pictures, and video tours allow the buyer to get a good feel for a home, before ever setting foot within the property.
With a greater segment of the population glued to their screens during isolation measures, there could be a marked increase in recreational and serious buyers browsing the online marketplace. Agents will be ensuring more than ever that their online listings are as detailed and alluring as possible.
These tools will help the real estate market move online, at least until isolation measures have passed:
360 Virtual Video Tours
More agents are working with photographers specializing in 360 home video tours as a way to create an immersive experience for the home buyer.
By helping to bring the property listing to life, buyers like that they can get a feel for the space without being there. A good virtual video tour is navigable, interactive, and controlled by the viewer. The resolution should be high, and the control tools should be intuitive.
The ultimate goal is to replicate the experience of walking through each room, in person. During COVID-19, 360-home tours are a recommended alternative to an open house.
Supply and demand
Especially in large cities like Toronto and Vancouver inlcuding surrounding suburbs it is challenging to purchase an affordable home because of high demand and low supply. In Toronto due to land shortages and the influx of immigrants, more people need homes to live in. At the start of 2020, the Toronto Regional Real Estate Board (TREB) shared that shrinking inventory had led to a double-digit jump in housing prices.
Seasonal real estate trends
Seasonality trends in the Ontario market can also play a role in real estate price increases.
During the winter, many people pause home searching to avoid poor weather conditions. If sellers are intent to sell during the winter season, the decrease in demand may require sellers to lower their asking price.
Spring and summer are when Canadians come out of “hibernation” to purchase homes. For sellers, the good weather can boost curb appeal to make their homes look better to homebuyers. Therefore, sellers can increase prices because of demand.
When the fall season rolls around, it can bring less inventory on the market because of the busy home purchasing activity which happened during the spring and summer seasons. Yet, demand remains stable, so homebuyers can expect competition when trying to secure the house they desire.
Real Estate estate prices haven’t shown signs of decreasing. Trends from earlier this year show that market activity continues despite social distancing measures from the coronavirus pandemic.
Many housing markets in Ontario are considered seller’s markets. Yet, homebuyers can leverage low-interest rates to qualify for mortgages, purchase homes in areas with less demand, and use seasonal real estate trends to try to get a leg up on the competition.
Source: Re/Max Canada