Traditionally, spring is one of the busiest times of the year for real estate. But the coronavirus outbreak—and subsequent stay-at-home orders—led many buyers and sellers to put their moving plans on hold. In May, sales volume in Ottawa and the surrounding area fell by 44% compared to a year ago, according to the Ottawa Real Estate Board.1
However, while sales have fallen, prices in Ottawa have continued to climb. The average home price in May was up 11.2% from the same month last year.1 And in many metropolitan areas across Canada, prices have continued to rise. The Teranet–National Bank Composite House Price Index, which measures 11 major Canadian markets, showed home prices in May were up 6% from a year earlier. The 12-month rise was led by Ottawa-Gatineau (13.8%), Halifax (10.5%), Toronto (9.7%) Montreal (9.7%) and Hamilton (8.3%). Lagging the countrywide average were Victoria (3.4%), Winnipeg (3.4%) and Vancouver (0.7%). Deflating over the 12 months were Quebec City (−0.2%), Calgary (−1.3%) and Edmonton (−1.7%).2
But given safety concerns and the current economic climate, is it prudent to jump back into the real estate market?
Before you decide, it’s important to consider where the housing market is headed, how the real estate process has changed, and your own individual needs and circumstances.
WHAT’S AHEAD FOR THE HOUSING MARKET?
In response to the economic slowdown, the Bank of Canada has slashed interest rates.3 That’s good news for homebuyers who have struggled to afford a mortgage in the past. Lower mortgage rates can bring down monthly payments or increase a buyer’s purchasing power while making it easier to qualify for a loan.
And at a recent press conference, Bank of Canada Governor Stephen Poloz told reporters that interest rates would likely remain low for the foreseeable future. He also noted that the country is on track to meet the central bank’s “best-case scenario for recovery” as outlined in April, and he didn’t predict damage to the economy would be as “dire” as some have speculated.4
While many buyers are eager to take advantage of low mortgage rates, some wonder if recessionary pressures could drive down home prices, too. Economists at the Canada Mortgage and Housing Corporation predict that prices will decrease over the next 12 months.5
However, evidence shows that our local Ottawa market has seen steady increases in average home prices – even during the crux of a pandemic and global economic recession.
There has been a continuing shortage of affordable homes on the Ottawa market for years, and that inventory shortage has propped up prices—even as sales have slowed. That’s because supply has fallen but the pent-up demand that existed pre-COVID still exists leaving eager buyers to compete for listings. Nevertheless, the Ottawa region’s stable employment and a continuous influx of newcomers, homeowners can take comfort in the knowledge that owning a property in Ottawa and its surrounding areas is a solid investment.6
There are opportunities out in the marketplace for both buyers and sellers. But now more than ever, it’s crucial to have a professional real estate agent who understands the local market dynamics and can help you assess the best time to buy or list your home.
HOW HAS THE REAL ESTATE PROCESS CHANGED?
The safety of my clients my top priority. That’s why I follow a process for buyers and sellers that utilizes technology to minimize personal contact.
For my listings, I’m holding online open houses, offering virtual viewings, and conducting walk-through video tours. I’m also using a screening process to qualify interested buyers before in-person showings are booked. This enables me to promote your property to a broad audience while limiting physical foot traffic to only serious buyers.
Likewise, my buyer clients can view properties online in their personalized portal that I setup for just for them so they can take virtual video tours to minimize the number of homes they step inside. Ready to visit a property in person? We can decrease surface contact by asking the seller to turn on all the lights and open doors and cabinets before your scheduled showing.
The majority of “paperwork” is also digital. In fact, many of the legal and financial documents involved in buying and selling a home went online years ago. You can safely view and eSign contracts from your smartphone or computer.
While these new ways of conducting business may seem strange at first, keep in mind, many military clients, international buyers, and others have utilized virtual methods to buy and sell homes for years.
IS IT THE RIGHT TIME FOR ME TO MAKE A MOVE?
The reality is, there’s no “one size fits all” answer as to whether it’s a good time to buy or sell a home because everyone’s circumstances are unique. But now that you know the state of the market and what you can expect as you shop for real estate, consider the following questions:
Why do you want or need to move?
It’s important to consider why you want to move and if your needs may shift over the next year. For example, if you need a larger home for your growing family, your space constraints aren’t likely to go away. In fact, they could be amplified as you spend more time at home.
However, if you’re planning a move to be closer to your office, consider whether your commute could change. Some companies are rethinking their office dynamics and may encourage their employees to work remotely on a permanent basis.
How urgently do you need to complete your move?
If you have a new baby on the way or want to be settled before schools open in the fall, I recommend that you begin aggressively searching as soon as possible. With fewer homes on the market, it’s taking longer than usual for clients to find and purchase a home.
However, if your timeline is flexible, sellers may be more incentivized to negotiate on terms and price. Talk to me about setting up a search so I can keep an eye out for new properties that pop up. I can also help you to get pre-qualified for a mortgage now so you’ll be ready to act quickly.
If you’re eager to sell this year, now is the time to begin prepping your home for the market. Prices could fluctuate, and experts predict a second wave of infections may necessitate another lockdown.7 If you wait, you might miss your window of opportunity.
How has your particular market segment been impacted?
Certain segments will weather this economic downturn better than others. It’s important to understand the market dynamics of your particular neighbourhood, price point, and housing type. The truth is, broad macroeconomic projections rarely paint an accurate picture of the day-to-day market realities of a given neighbourhood.
How long do you plan to stay in your new home?
During times of market uncertainty, your best bet is to buy a home you can envision yourself keeping for several years. With ultra-low mortgage rates, you may have extra wiggle room during negotiations or be better-positioned to afford a larger home.
Is your income stable?
If there’s a good chance you could lose your job, you may be better off waiting to buy a home. The exception would be if you’re planning to downsize. Moving to a less expensive home could allow you to tap into your home equity or cut down on your monthly expenses.
WHEN YOU’RE READY TO MOVE—I’M READY TO HELP
While uncertain market conditions may give pause to some buyers and sellers, they can actually present an opportunity for those who are willing, able, and motivated to make a move.
Your average spring season would be flooded with real estate activity. But right now, only motivated players are out in the market. That means that if you’re looking to buy, you’re in a better position to negotiate price. And today’s low mortgage rates could give a big boost to your purchasing power. In fact, if you’ve been priced out of the market before, this may be the perfect time to look.
If you’re ready to sell, you’ll have fewer listings to compete against in your neighbourhood and price range. But you’ll want to act quickly—a second wave of coronavirus cases could be coming later this year. Ask yourself how you will feel if you have to face another lockdown in your current home.
Let’s schedule a free virtual consultation to discuss your individual needs and circumstances. I can help you assess your options and create a plan that makes you feel both comfortable and confident during these unprecedented times.
The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.
- Ottawa Real Estate Board – May 2020 Statistic Report –
- Home Price Index – https://housepriceindex.ca/2020/06/may2020/
- CBC –https://www.cbc.ca/news/business/bank-of-canada-interest-rate-1.5512098
- Financial Post – https://business.financialpost.com/pmn/business-pmn/bank-of-canada-governor-says-interest-rates-will-probably-stay-low
- Canada Mortgage and Housing Corporation – https://www.cmhc-schl.gc.ca/en/media-newsroom/speeches/2020/supporting-financial-stability-during-covid19-pandemic
- Ottawa Real Estate Board May 2020 News Release – https://www.oreb.ca/newsroom/news-releases/