2020 saw a lot of changes to the Real Estate Market, and 2021 appears to be following in its footsteps. Houses saw a huge jump in price, and the amount of showings per listing tripled at the minimum. The housing market prices have hit a 50 year high, with detached home sales up 20%. While prices are up, listings are down. 2020 saw the fewest active listings since 1993. This opened the door to a seller’s market, and encouraged the rise of sale prices.
The changes were not only seen in the Real Estate world however. The debt to service ratio actually fell. With less access to stores, there were less places to spend hard earned money, and for those who were suddenly without work, the government stepped in and helped them out with the CERB. Canadians were not left helpless, and are now looking for somewhere to spend that money. Consumer debt fell, which opened the door to mortgage growth acceleration.
There were two parts of Real Estate that did see a decline. Condominiums, and rental units. For the most part, these declines took place in the larger cities, such as Toronto and Vancouver, but we are starting to see the changes rippling into the smaller towns, and moving north. For the first time in a very very long time, maybe even in the history of Canada, the population has seen a decline. With the borders closed, the population has not been able to grow as it usually has. The non permanent Canadian Citizens, who usually buy the condos, or rent the units, are not entering Canada, and landlords are starting to hurt. They are being forced to lower their rents in order to still occupy their units, and pay some of their bills.
There is a history of a dramatic period of spending after every major “plague”, and we do not foresee this time to be any different. There is a pent up demand for spending coming, and the Real Estate Market is the perfect place for it to land. What economists are seeing is the higher earning savers are the ones who are not being affected by the lay-offs, and they will be the ones on the hunt for homes for the foreseeable future. This allows for the housing prices to continue to rise. What is being predicted is the decline in multiple offers. The market is being slammed right now with as many as 10-20 offers per listing, and the economists believe that with more houses being listed in the spring market, the offers will fall off, but prices will stay the same or continue to rise.
Bankruptcies are also at a major low, with credit cards being paid off, and new debt harder to access (casino’s closed, malls closed). This sees a future rise in savings, and investing, and the best way to invest with a guaranteed outcome, is to invest in real estate. Usually , with a major “out of depression spending” period, there is an inflation, and then a recession. If the spenders are purchasing land and home, the inflation will not happen. The bank of Canada has been buying bonds to suppress the interest rate, and in return suppress the inflation.
The forecast for 2021 is a great year for Real Estate. More listings becoming available, first time home buyers being able to have a chance, and we will see a rise in Condo sales again, with their prices being lower.
If you are interested in learning more about the market, buying or selling your home, or would just love to talk, please do not hesitate to reach out to us.