As COVID-19 rears its ugly head again, there are a few trends brokers should keep an eye on, writes Gerard Buckley
As Canadian provinces now reconsider their decisions to reopen businesses after the first wave of COVID-19 seemed to subside, prospective borrowers are facing tough decisions of their own. We saw in June, July and August how eager buyers, sellers and real estate agents were to make up for the opportunities lost between March and May. But after that frenzy of activity, and with COVID-19 poised for a comeback, where might the market be headed?
No reputable broker would pretend to know the future, but there are leaves floating in the tea that are worth paying attention to. Here are three trends I’m keeping my eye on to help my clients make sound decisions going forward.
1. The great migration
For families that have weathered the storm of the pandemic from inside a tiny condo in the GTA, exchanging the claustrophobia-inducing lack of space and the shoulder-to-shoulder hustle and bustle for some space and actual land of their own will be very appealing. The desire for freedom from gridlock extends from large families right down to single-occupant homeowners and renters. Ontario real estate agents have already noted the trend of prospective buyers setting their sights on communities outside of the GTA.
I’m sure my non-Ontario peers get a little tired of hearing that what happens in Toronto applies to their markets, but when a single metropolitan area accounts for such a sizeable proportion of national home sales, it’s often the first place housing trends show themselves. I’d be quite surprised if the same desire for space didn’t also show itself in Montreal soon enough.
This suburban/exurban/rural migration is expected to continue for the foreseeable future as the worldwide battle against COVID-19 blazes on. In Ontario, the popular lakeside towns and villages of Georgian Bay and Muskoka may feel this exodus more than rural farming communities, but in general, house prices outside of urban zones will likely rise due to increased demand.
2. Falling condo sales
The domino effect of today’s city dwellers heading to the hills tomorrow will be a decline in condo sales. With quarantining fresh in mind, fewer homebuyers will opt for a stylish box in the sky, especially when the average price of a condo in the downtown core of major Canadian markets equates to acres of land elsewhere. The overall toll this will take on current condominium investors could be significant.
Buyers looking to both avoid condo life and enter the housing market have been granted a bit of leeway by COVID-19. With more employers continuing to offer remote working options even after lockdown measures were rescinded, many workers no longer need to be in urban centres at all.
3. Frozen interest rates
Any ideas about the Bank of Canada increasing its prime interest rate have dissolved. With a fragile economy still discovering how to operate and countless businesses relying on emergency government loans, increasing lending fees is completely off the table.
Border closures are already leading to a lower immigration rate for 2020, leaving Canada’s population and economic expansion lagging behind years past. In a country that relies on such growth to boost the economy, fewer newcomers could also have dampening impact on the strength of the dollar.
On a positive note, anyone looking to sell property in the outlying parts of southern Ontario could fetch top dollar. Combined with low borrowing costs for future real estate investments, these sellers could find themselves in a very enviable position. Real estate agents in these communities are already reporting lightning-fast sales and increasing demand, much of which is stemming from the GTA. Brokers in these communities should be preparing themselves for a wave of new clients now.
Gerard Buckley is a licensed mortgage broker, management consultant and corporate director who specializes in financing for residential, investment and commercial properties.
