What the post-pandemic Canadian housing

What the post-pandemic Canadian housing market might look like

SYED MAHMOOD NAQVI

Vice President | MB Enterprises

The real estate market in Canada since the arrival of COVID-19 has reacted differently. This is similar to many other sectors where the effects has been evident, however, in the real estate the effects are divided into two periods. These two are in the form of periods divided into long term period effects and short-term period effects. Talking into a broader context, this global pandemic will be changing the real estate sector in Canada for at least a short term interval.

Evidently in all provinces in Canada the effects of COVID-19 has affected the corporate world with business shutdowns and most people working from home. The increase in remote working operations is not the only answer though, there has been social distancing in public places and following other mandatory measures associated with COVID-19. The question arises how it has affected the Real Estate market in Canada? The trends of the past few months has shown that, ironically due to limitations in budget real estate prices has considerably fluctuated. The term ‘Business as Usual’ is highly affected as usually what happens has been impacted due to change in circumstances. These change in circumstances has risen due to the impacts of Coronavirus virtually on the whole business community. As it is highly ambiguous in this pandemic situation that how the market will behave for at least some time. The brokerages and real estate agents have started to operate differently with higher ambiguities on how the markets will be performing.

SHORT-TERM EFFECTS ON THE CANADIAN REAL ESTATE:

The declaration of COVID-19 as a global pandemic was made by WHO, or World Health Organization post March 11. At the same time stats were released from Canadian Real Estate Association, i.e. CREA. It showed that the month of February was particularly hot for year-over-year sales that rose 27% nationwide. This was also an indication to the fact that busy

spring buying season had started early. Also performances showed incredible results for both Toronto and Vancouver i.e. 45.6% and 44.9% rise in sales transactions respectively for the two cities.

Despite all this post pandemic results vary, we can also expect to see market activity slow down, as buyers and sellers may reach a stalemate. Sellers will show hesitancy in accepting lower offers while the buyers on the other hand will hold off their home purchase amid uncertain health and economic conditions. Both of these are rising due to the results of the pandemic. Although these can be termed as short term effects of the pandemic, however, these can be influence generators for long term effects. At the same time the effects of the pandemic can be balanced as well as there are some buyers and sellers in the real estate who can’t avoid the buying or selling at any cost.

There are still those who need to sell and buy right now that is for the sake of relocation for work issues, or those

who have already sold their home Pre-Pandemic and are looking for another one soon. These are known as “Highly motivated” buyers and sellers and they are the ones who can’t change their decisions due to the effects of the pandemic. This is mainly as their life is already under influence of some circumstances for e.g.: Divorce, relocation due to work, or downsizing or upsizing quickly.

THE LONG TERM EFFECTS ON THE REAL ESTATE:

What’s more hard to predict is how COVID-19 will continue to be a threat i.e. along with its impacts on individuals, businesses and the market. It’s hard to predict because COVID-19 is still not over yet and how COVID-19 has changed the circumstances is a huge question mark.

As an example the case study of Ontario real estate market is the best answer. While the circumstances are wildly different, the last time the market saw a change was in the spring of 2017. The effects of that cooldown lasted into the second half of 2019 which means at least two years period. However, the effects of the two year period means higher effects of pandemic COVID-19 predicted as it started lately in March 2020 and the markets are still under the negative influence of the pandemic.

However, the reality states that the fundamentals of the market i.e. particularly in the GTA and other major urban centers don’t change. Also, due to the limited inventory available and also combined with the growth of population in Ontario’s big cities like Toronto we can expect fast recovery. This can be expected once the health risks are mitigated from COVID-19 effects and the financial markets stabilize. Bringing stability to the sector after COVID-19, is itself a huge necessity.