It's a case of employment growth versus supply and demand
Contrary to the direst predictions, job losses brought about by COVID-19 will not have a significant impact on real estate activity, said Christopher Alexander, executive vice president and regional director at RE/MAX of Ontario-Atlantic Canada.
A major reason for this is the fact that the ones most likely to buy homes are the ones that have mostly retained their purchasing power, Alexander told BNN in an interview.
“Unlike the past recessions and most recently, the housing crisis in the United States in 2008, most of the people losing their jobs [due to the pandemic] are in the service industry and aren’t necessarily in the home-buying space,” Alexander said. “Many executives and professionals still have their jobs. Some of them have had to take a reduced pay, but they seem to be willing to make that buying decision. We’re seeing signs of this not just in the marketplace but online on our website and from consumer behaviour. All things are pointing improved activity across the board.”
Alexander said that prices in most Canadian markets are expected to remain at elevated levels largely due to low supply and accelerating demand.
“I think that is going to continue for the foreseeable future. We’re seeing signs right across the country, outside of parts of Alberta, where there’s just not enough inventory to keep pace with demand,” Alexander said.
And even if the pandemic ultimately lowers the number of actual home buyers, mounting demand in late 2020 should offset this weakness.
“Exceptionally low inventory in much of Canada may also contribute to upward price pressure as restrictions ease and demand increases further,” RE/MAX said in a separate analysis. “As cities slowly begin the reopening process in the coming weeks, there is likely to be a transition from the uncertainty around the home-buying journey that was seen early on in the COVID-19 pandemic, to an increased comfort level among consumers and real estate agents when it comes to adopting new buying and selling processes.”
