{"id":16688,"date":"2020-10-28T10:10:00","date_gmt":"2020-10-28T17:10:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=16688"},"modified":"2020-10-03T14:56:20","modified_gmt":"2020-10-03T21:56:20","slug":"covid-19-pandemic-wont-be-enough-to-keep-canadas-housing-market-down","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2020\/10\/covid-19-pandemic-wont-be-enough-to-keep-canadas-housing-market-down\/","title":{"rendered":"COVID-19 Pandemic Won&#8217;t be Enough to Keep Canada&#8217;s Housing Market Down"},"content":{"rendered":"<p style=\"text-align: justify;\">\u2022 Buyers can afford 24% more house than they could just two years ago, thanks to falling mortgage rates<br \/>\n\u2022 But housing inequality will rise as condos struggle and detached homes boom, Moody\u2019s predicts<br \/>\n\u2022 Smaller, cheaper markets could benefit from an exodus from the cities<\/p>\n<p style=\"text-align: justify;\">The COVID-19 pandemic has shuttered thousands of businesses, saddled the federal government with a record jump in debt and left the country with 1.1 million fewer jobs than at the start of the year.<\/p>\n<p style=\"text-align: justify;\">But some market experts say that won\u2019t be enough to keep Canada\u2019s housing market down. They say the country\u2019s chronic big-city housing shortage has combined with dropping mortgage rates to create a recipe for rising prices.<\/p>\n<p style=\"text-align: justify;\">And that has some experts worried about rising inequality in Canadians\u2019 housing conditions.<\/p>\n<p style=\"text-align: justify;\">Even after hitting a record high this summer, the average resale price of a home in Canada will jump 12% in the next two years, UK-based Capital Economics predicted in a client note Monday. The average price already jumped 18.5% in the past year, according to the Canadian Real Estate Association.<\/p>\n<p style=\"text-align: justify;\">That\u2019s a far cry from Capital\u2019s forecast this spring, when they predicted the pandemic would push house prices down marginally. But a string of hot months for the housing market post-lockdown has seemingly convinced them otherwise.<\/p>\n<p style=\"text-align: justify;\">\u201cDespite challenges for apartment prices in Toronto and Vancouver, there is still scope for overall home prices to rise sharply, primarily due to much lower borrowing costs,\u201d senior Canada economist Stephen Brown wrote.<\/p>\n<p style=\"text-align: justify;\">Mortgage rates have come down over the past few years, and amid the pandemic they have hit all-time lows, with five-year fixed-rate mortgages now being advertised for under 2%.<\/p>\n<p style=\"text-align: justify;\">Brown estimates that buyers\u2019 maximum purchase price has jumped 24% in the past few years, thanks to falling mortgage rates, but the average house price has risen 4% in that time.<\/p>\n<p style=\"text-align: justify;\"><strong>Houses, Condos Moving in Different Directions<\/strong><\/p>\n<p style=\"text-align: justify;\">Still, the condo part of the housing market could be in for a rougher ride than detached homes in the next few years, because the economy is changing.<\/p>\n<p style=\"text-align: justify;\">\u201cFirst, the pandemic has led to higher demand for more spacious houses, due to health concerns and increased working from home,\u201d Brown wrote.<\/p>\n<p style=\"text-align: justify;\">\u201cSecond, the larger rise in unemployment among lower-wage service sector workers has weighed more heavily on the apartment rental market. Finally, lower immigration has also reduced apartment rental demand.\u201d<\/p>\n<p style=\"text-align: justify;\">Brown noted that rental rates have fallen in many major cities, including Toronto, Vancouver, Montreal and Calgary.<\/p>\n<p style=\"text-align: justify;\">Capital Economics doesn\u2019t issue a separate forecast for condo prices, but Brown said the ratio of sales to new listings in Greater Toronto points to a 5% price decline in condo prices in Canada\u2019s largest housing market over the next few years.<\/p>\n<p style=\"text-align: justify;\">He doesn\u2019t see the exodus from the cities as a permanent new trend \u2015 though he does expect it to last a few years.<\/p>\n<p style=\"text-align: justify;\">\u201cOur theory is that the pandemic has accelerated normal life choices for a key cohort of people,\u201d he wrote in an email to HuffPost Canada. \u201cSay for example a certain (percentage) of 30-35 year olds move to the suburbs each year to start a family. The pandemic has encouraged a much bigger share to move this year &#8230;..\u201d<\/p>\n<p style=\"text-align: justify;\"><strong>Housing Inequality on The Rise<\/strong><\/p>\n<p style=\"text-align: justify;\">Still, not all forecasts agree Canada will see the sort of rising prices in the coming years that it has seen in recent months. In a report last week, credit ratings agency Moody\u2019s predicted house prices in Canada would fall nearly 7 per cent in 2021, and prices won\u2019t return to pre-pandemic levels until around 2023.<\/p>\n<p style=\"text-align: justify;\">\u201cThe pandemic will lead to even further widening in economic inequality, including housing,\u2019 Singh wrote.<\/p>\n<p style=\"text-align: justify;\">\u201cWhile demand for single-family homes with ample space and large pantries may rise, so too might demand for smaller apartments and condos given the struggle many families will face in saving for a down payment.\u201d<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.msn.com\/en-ca\/money\/finance-real-estate\/canadian-house-prices-housing-inequality-set-to-jump-in-wake-of-pandemic-experts\/ar-BB19xBAE\" target=\"_blank\" rel=\"noopener noreferrer\">Canadian House Prices, Housing Inequality Set to Jump in Wake of Pandemic<\/a> by Daniel Tencer | Huffpost Canada | MSN Real Estate<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u2022 Buyers can afford 24% more house than they could just two years ago, thanks to falling mortgage rates \u2022 But housing inequality will rise as condos struggle and detached &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2020\/10\/covid-19-pandemic-wont-be-enough-to-keep-canadas-housing-market-down\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-16688","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>COVID-19 Pandemic Won&#039;t be Enough to Keep Canada&#039;s Housing Market Down &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2020\/10\/covid-19-pandemic-wont-be-enough-to-keep-canadas-housing-market-down\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"COVID-19 Pandemic Won&#039;t be Enough to Keep Canada&#039;s Housing Market Down &#8226; 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