The current situation:
The housing market has certainly benefitted from our current situation. Covid has accelerated the housing market and not just locally but from coast to coast. Not all markets are in the frenzy we are seeing locally but all markets are seeing a leap in volume sales. This is unprecedented. Real Estate has played a huge role in the economic recovery.
Historically Low interest rates are certainly playing a part. The good news is that less than ¼ % of mortgages are in default across the country which may be the lowest in the world. Those qualifying for mortgages are qualifying at interest rates (4.79%) that are at least 3% higher than current rates. First time buyers are comparing carrying cost to rent costs and are choosing to invest in themselves. The stress test introduced a few years ago only delayed the demand and these buyers have now come to market as a lump.
Because people have not been able to spend over the past year, their savings are much higher. Working from home has allowed people to live in areas they consider more desirable and less expensive than the bigger cities. Investors are buying in more affordable locations and interprovincial migration has increased. Many people in 2020 have not bought yet.
We have many people who are waiting out the pandemic to make a move. Slowly we are opening the borders to immigration which contributes in large numbers to the housing market. Foreign students will add more pressure as well. Canada sees numbers of around 830,000 students per year studying in our country.
All of this is adding demand which is greatly exceeding the supply.
It is expected that prices will continue to rise, demand will continue to grow breaking records coast to coast for 2021.
As things go back to what will become a new normal, work from home will continue with trips to the office intermittently. Some will tire of commuting and move back to more convenient locations.
The answer to this situation is more product. Unfortunately, that is not an easy task.
Have any questions? Please ask.