It’s safe to say that despite the COVID-19 pandemic, the Canadian real estate industry is booming. As of 2020, Canada experienced a record year in real estate sales with 12.6% more transactions than in 2019 and equally robust price increases.
Canadian housing was so strong that, during one of the most severe economic crises in recent history, it was a key driver of the economic recovery of the nation.
The unstoppable force that is Canada’s residential real estate market showed no signs of letting up in January. All this despite the renewed pandemic closures which kept buyers and many dealers searching from home and on the sidelines.
In nearly all major markets, the numbers of new listings decreased in January, causing additional rising price pressure. In most cases, the demand for suburban areas has increased rather than city cores, but even those area are rebouding.
Your House Makes More Than You Do
As domestic sales tear across Canada this winter, “homes prices not only rise more quickly than family income but also increase more than total annual income.
One thing that might steam house prices away is the higher mortgage rates, and that is likely in the coming months. The mortgage rate tends to be based on interest paid on government bonds, which in recent weeks have soared.
The real estate market in Calgary was in the doldrums last year. The initial wave of the pandemic, combined with a dip in energy prices, led the market to fall further — only 573 units sold in April, which was down 63% from the previous year.
This drop was not unexpected considering the economic situation. But, 14 months later, while unemployment is still about 10% and the third wave of COVID-19 cases is wreaking havoc, home sales would be devastating records.
It depends largely on how fast we get out of this third wave (of COVID-19). The market generally will stay unsettled until this pandemic is resolved. But this market will also settle when things improve.
It was certainly a struggle, but there is no second thought. Everyone is super excited about houses. People could find something they love. Contact REP Calgary Homes for more information!
What about mortgage loan insurance?
In Canada, default insurance is necessary for down payments of less than 20 percent of the purchase price also referred to as CMHC insurance.
In case the borrower stops paying and defaulting on its mortgage loan, mortgage default insurance protects lenders. At the outset of its mortgage, the borrower shall pay the CMHC insurance premiums in full.
The Canadian Mortgage and Housing Corporation (CMHC) recently tighten its mortgage insurance qualifying conditions. However, these stricter regulations are specific to the CMHC, and with other mortgage insurers, different solutions are available.
Will buyers continue their interest in renovating homes?
Expatriates return from abroad and immigration increases with the drop in travel restrictions. However, the housing stock in the whole country remains chronically low. This makes a strong trend for Canada’s real estate.
In the past, when luxury buyers used to buy a property, they wanted it to be moving in.
In the pandemic, people are working from home and taking care of the garden and backyard, they expected everything to be done before they move. This is a trend that we will be continue to observe in the years ahead.