Canadian Real Estate Market Update
With the current impact of the COVID virus there is understandable concern across the country of how the real estate market will be impacted. Different cities have experienced unique fluctuations with this being such a diverse industry. Toronto, Montreal, Ottawa, London, Edmonton and Vancouver were all covered in our REC Brunch yesterday. Here is a recap of how the pandemic has impacted each market.
We still remain in a seller’s market in Toronto with at least 2 months of inventory to hold onto. We have been able to maintain a strong degree of comfort for values in the GTA as we have not been delivering half of what we need to reach our required supply year over year. Nothing has changed in market dynamics or demand, the market has kept solid. We are just in a pause for the time being, and we predict everything to keep on track as usual when everything reopens.
Montreal is in a state of lockdown along with the rest of the province. They current only have priority transactions, meaning they can only show properties that plan to conclude in a sale by July 31. This has inevitably caused a dip in sales, as it’s difficult to get buyers to commit in such a short window. New listings cannot be shown right now, which is being fought by the association and slowly they are making ground to return the sales process to normal. Developers have been offering discounts for pre-construction condo investments at 5% in order to keep a strong sales volume. Confidence from buyers has staggered, but is still generally positive. Montreal still remains at a seller’s market, sales were even stronger at the beginning of 2020 than they had been years prior. If you have comfortable finances, buying in Montreal is still a wise choice. Worst case scenario for the end of this pandemic is a 5 - 7% decrease in values, but 1% is more likely.
Ottawa was on a huge upswing with a prominent seller’s market before COVID-19 emerged. A minor decrease in showings, listings and sales expectantly marked April. The market impact has been minimal, so an upcoming price drop is likely, but likely minute. Strong immigration due to government jobs and a large degree of post-secondary students is what has kept the industry steady. Many students have gone home, but the inventory is still being absorbed. Buyer confidence has decreased, and most likely won’t readjust for a year.
London, Ontario has continued to remain very strong during the pandemic. They have a strong seller’s market with approximately 1.8 months of inventory. Property sales are not an issue, as they are seeing an average of 8 days on market. There is a big increase in demand as savvy investors are seeing the opportunities which will likely greatly increase in value after the quarantine is lifted.
Edmonton has remained cash flow positive for investors. Prices won’t drop dramatically thanks to strong occupancy rates. Many people are holding onto their assets at this time, so it’s unlikely to see any resale opportunities in the coming months. A large degree of year (and longer) leases have been signed last month, as demand to live there hasn’t staggered.
Vancouver experienced its first dip in inventory in years thanks to the quarantine. Similar to Ontario, open houses have now switched to being virtual to slow the spread of the virus. Just like Toronto, there is a continuously widening housing deficit which has kept prices increasing. The low interest rates and limited supply demonstrate an opportune time to invest. Prices will hold for the time being, but are very likely to increase in the coming months.
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