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A Tough but Temporary Blow to our Housing Market

Wednesday, April 8, 2020 Written by Emmanuelle in General

Let us sit back on and see how our real estate market is doing.

The Pandemic has soured the outlook almost overnight:

Social distancing and the economic shock has started to cut home sale activity. The timing and speed of the eventual rebound is uncertain.

Social distancing is disrupting spring housing market

Canada’s housing market will slow to a crawl this spring as Canadians follow social distancing orders in order to combat the spread of COVID-19.

Realtors have suspended open houses and in person showings in the Ontario, only virtual showings are still allowed at this stage.

Equity markets’ freefall, mounting job losses, reduced work hours, the shutdown of Canada’s borders (stemming the flow of in-migrants) will hammer confidence and cool demand. Investors and speculators also are likely to sit things out for a while. There will be plenty of reasons for sellers to wait and see as well.

A shock like this one is an inauspicious time to get full value for a property. We expect for-sale inventories to shrink, which will further contribute to stall activity.

The pandemic will be a temporary shock

Housing activity will resume once the health crisis comes under control and authorities lift containment measures.

Property values will fall briefly

Property values have received strong support from tight demand-supply conditions in the majority of markets since mid-2019. Still the market has started to change nearly overnight.

  • As an example, the Oakville Real estate Market for detached homes has dropped -65% on number of sales only on the 2nd half of March.
  • Also in Oakville, the Average Selling Price went from $1,153,728$ in February, to $1,140,566 in March.

Let us all keep positive and strong, things will get better.
 

Source :Robert Hogue is a member of the Macroeconomic and Regional Analysis Group, with RBC Economics and Toronto Real Estate Board.

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