What is fueling this unexpected home-buying craze!?
Since the spring of this year, the real estate market has experienced an unexpected buying free for all. Home sales across BC and Canada have risen sharply, dragging average selling prices with them.
In May of this year Canada Mortgage & Housing Corporation rocked the industry with their controversial take on the 2020 market. They predicted the housing market will see a historic recession in 2020.
CMHC sited that the national and provincial economic outlook is subject to considerable risk given the:
– Rapid evolution of COVID-19 and duration of the pandemic
– Speed at which the global economy and financial markets are reacting
– Significant regional disparities in economic impact on housing markets
“Canada will experience a historic recession in 2020 with significant declines in all housing indicators. Severe loss in household income and employment, and migration at a standstill contribute to unprecedented falls in construction activity and sales. The decline in housing activity is compounded in oil producing provinces as the energy sector is also experiencing historic lows.
Following declines in 2020, housing starts, sales and prices are expected to start recovering by mid-2021 as the pandemic recedes. Sales and prices are still likely to remain below their pre-COVID-19 levels by the end of 2022. The precise timing and duration of the recovery is highly uncertain, as the trajectory of the pandemic is not known.”
How did they get it so wrong?
In their defence, Pandemics are not every day occurrences thank goodness and it is often difficult to predict consumer behaviour in unprecedented situations. There are a number of factors at play fueling this home-buying craze.
Some of the effects of the pandemic include more Canadians working from home. This increase in the number of employees and children working and studying from home has necessitated the need for more space including private working space. Additionally, Canadians have spent an inordinate amount of time “locked down” and it is obvious that while doing so they have taken stock of their digs and decided to either renovate or move.
Have you tried to get any home repairs done lately?
If you are contemplating a renovation you better get on the wait list now as renovations to homes have sky rocketed over the last 6 months’. Most popular renovations include kitchens, bathrooms and additions. Other noteworthy trends include installation of pools, home gyms and saunas as families ensure that everyone will be comfortable, healthy and active at home while enjoying their space.
Another significant factor fueling the market is the continuation of relatively low mortgage rates which increases buying power which in turn increase prices. Adding more fuel to the fire is the decrease of listing inventory levels across Canada in comparison to previous years. This is the perfect storm of too many buyers chasing too few goods.
So where did all of these “new” buyers come from? A couple places really. The industry has seen an increase in the number of first-time home buyers entering the market as renters have come to the conclusion that if they need more space they will have to buy it.
Additionally, there is also an increase of second home buyers as Canadians plan to play and recreate in their home country after seeing international border crossings closed to them. Interestingly, these buyers only take out of the market unlike “move up” buyers who put in to the market as they list their properties for sale in order to acquire a new home.
Another interesting trend is a desire for more rural settings as urbanites flock to less populated environs. As many companies rethink the “bricks and mortar” offices and allow employees to work remotely, many employees are opting to move back home, to smaller towns, closer to family.
We expect this intense competition to buy a new home to extend into 2021 as Canadians appreciate what the real estate industry has known forever.
“There’s no place like home!”
RE/MAX Orchard Country – Summerland
RE/MAX Penticton Realty – Main & Skaha Lake Road
RE/MAX Realty Solutions – Osoyoos