Change is constant in nearly everything in life, and even though the real estate industry in Canada can be a real rollercoaster it’s the way it needs to be to ensure continuing volatility. Being tied to the economic prosperity of the country and those who work hard enough within it to be homeowners is never going to change, but here in the middle of 2020 we’re seeing how a virus can produce wholesale shifts in the buyer and seller prerogatives of people who are active in the real estate market.

Much has already been made of the way the condo market in places like Vancouver and Toronto has really sagged over the last half a year. There’s a whole lot of factors going into that, and the good news is that we’re already seeing how lower prices on new condominiums resulting from overstretched investor buyers is creating a first time homebuyer benefit for people who DO want to live in the city.

Now of course being on top of these trends and all the ripples that come with them is part of what makes for a good and knowledgeable real estate agent, and ones who are new to real estate in Canada might have more of a reason to focus their efforts on the condo market if they are working in the major metro areas. That may be the smart move given what we’re seeing with dropping condo prices making more young people into potential buyers.

What’s also always a smart move is taking advantage of anything that creates the opportunity for you to grow your client base. Here at Real Estate Leads, our online real estate lead generation system for Canadian realtors is an excellent way to put the power on Internet marketing to work for you to put you more directly in touch with home buyers and sellers who are genuinely considering making a move in the local real estate market.

But back to topic – it’s important to look at this condo surplus / lower prices trends from a bigger-picture perspective, so let’s do that.

Increased Premium on Space

On the things the pandemic lockdown made clear for many people is that being in 600 or so square feet for extended periods of time can really put your mental wellness to the test. Another aspect that’s souring people on condo living downtown is the way these areas are increasingly dirty, congested, and crippled with increasingly criminal activity following decades of a ‘soft on crime’ model as created by successive federal governments.

Many people are not speaking to a real estate agent about making a move to more suburban areas where they can have some space and perhaps even a yard or rooftop patio – if they can afford to do that. Typically that’s been increasingly possible as good numbers of people who owned these properties in the ‘burbs ‘downsized’ once they retired and made some money selling the home and moving into the condo just the two of them.

Long story short, that’s not happening as much as it used to, as people put off selling their detached home or townhome for two reasons:

1. The market being down overall due to the COVID freeze that has yet to thaw entirely, with many apprehensive buyers and others who can’t afford the prices these owners would like to get for their homes. It’s entirely natural for homeowners to postpone putting their home on the market until it’s more favourable for them.
2. These same folks who HAVE yards and space are now hesitant to trade that in for a box in the sky if these sorts of measures are going to become commonplace in the future. They have a new found appreciation for the space their current home affords them, and they’re not going to be convinced to part with that in the interest of making some profit and downsizing to a smaller place quite like they used to consider it.

Now to be fair the effect of this can go both ways depending on other market factors contributing. Around larger urban areas it may be that some detached homes or townhomes that ARE put on the market will be able to get asking price based on simply demand far exceeding supply.

In other areas of the country, however, it’s not likely to be the same. The ‘downsizing’ segment of the market isn’t going to be as affected, but then again in these areas these same people likely won’t be downsizing to condos and the like the same way – because there are few of them to begin with!

Likely Long-Term Trend

While we can look forward to the Global Pandemic and everything that’s associated with it eventually passing, there have been a number of social scientists who say the way it’s changed people’s thinking is probably here to stay. People are seeing the appeal of getting out of cities like never before, and while that’s great for realtors in rural areas of Canada and to a lesser extent in ‘satellite’ cities, it’s not as good for those working in metro areas.

Sure, more condos will sell but they may well sell for way less than they would have a year ago, and then there’s the fact that a lot of condo owners who would sell after buying the homes of ‘downsizers’ won’t have the opportunity to do so because those owners aren’t selling.

Sign up for Real Estate Leads here and receive a monthly quota of qualified, online generated buyer and / or seller leads that are delivered to one realtor only – you. Yes, these leads will be for the region of any city or town in Canada where you’re working as a realtor, and again you’ll be the only one who receives them. From there you have the opportunity to be in touch with these prospective clients first and impress them with your knowledge of the local market and all-round real estate expertise. It’s an excellent way to supercharge your client prospecting efforts, and it’s highly recommended with the competitive nature of the real estate business in Canada.

 

The fact that this current global situation has taken a great many would-be qualified homebuyers in Canada off that list doesn’t need a whole lot of explanation, and we have covered how the pandemic has put serious constraints on the real estate market in Canada. Of course, the one reality that’s shone through after these past 6+ months, however, is that supply and demand economics have done very well in preventing the real estate market from crashing like some prophesized it would.

That’s not to suggest this is good news entirely, as the way the market has kept itself somewhat insulated from the economic downfalls of the pandemic has continued to make home ownership out of reach for a lot of people. There’s some good news to counter that somewhat, but before we get to that one of the unfortunate realities of fewer qualified buyers is fewer newer clients for real estate agents. That can be very troubling, especially for a new realtor who’s looking to make a name for him or herself.

That’s why our online real estate lead generation system here at Real Estate Leads is such a great resource for realtors who’d like to take every advantage they can to ensure a continued slice of the pie. Both during these troubling times, and at any time really. It puts you more directly in touch with people who are genuinely considering making a move in the local real estate market, and if there’s a way for you to be in touch with them first… well, what’s not to like about that?

But back to topic. It may be perhaps in understanding of the need to keep the real estate market accessible for people that the BOC (Bank of Canada) has chose to keep interest rates low for the foreseeable future – at 2.5% to be exact, and this means that a good number more couples will find the idea of taking on a mortgage to be not quite so intimidating.

Good News: Borrowing Costs for Homes Staying Low

In announcing this news, the Bank stated “Monetary policy is working to support household spending and business investment by making borrowing more affordable,” and while that doesn’t refer to housing explicitly it’s fairly sure that allowing Canadians to both improve their housing and support an industry that’s very important to the country’s GDP have definitely factored into this.

Much of this will very likely predicated on the fact that household spending rebounded sharply over the summer, with stronger-than-expected goods consumption. Plus, we’ve seen what many economists specializing in real estate predicted – much of the large amount of housing activity seen since May or June was a reflection of pent-up demand.

This is big, because the Bank of Canada’s key rate influences interest rates for home mortgages, and then we’ve already seen them cut the key rate 3 times in March 2020 to keep the economy afloat when all of this craziness was new. From a rate of 1.75 percent at the start of that month, the central bank brought it down to 0.25 percent. That is the lowest level that can be set, and it’s quite telling that they’d be willing to do this at this time?

Is the solidity of the Real Estate Market an integral part of an economically healthy Canada? You bet it is, and while there’s both good and bad to that the fact of the matter we need a strong and vibrant market where homes retain value at the very least, and ideally increase in value for both owners and the civic interests that are served with property taxes.

Even Lower Rates?

Seems so. Just last week we saw lenders like CanWise Financial and MortagagePal.ca offering 5-year mortgages at 1.74%. And the bigger lenders were on board with this too – TD Bank had 1.99%, Scotiabank 2.09%.

We’ll conclude here by adding one little important fact. The BOC has stated that it will hold the policy interest rate at the effective lower bound until the economic slack is absorbed. That’s the way it should be, and it’s a very positive development for both the country as a whole and for people who want to buy a home and enter into the real estate market where they live.

Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you exclusively. No other realtor receives these leads, only you do, and they are for prospective buyers and sellers living in the area of the country where you are living too and working as a real estate agent. It’s an excellent way to get so much more out of your client generation efforts, and we find that most realtors quickly come to see it as a part of their marketing budget well spent.

Yet again we’re seeing by and large irrefutable evidence that the way the demise of the Canadian Real Estate market from the Pandemic isn’t turning out that way at all, and that the real estate market in Canada continues to be in good health by and large. The CREA (Canadian Real Estate Association) just recently announced that more homes were sold across then country in July of 2020 than in any other month over the past 40 years. Yes, you read that correctly – 40 years – and that’s an awfully long time and covering some times when the ‘economic outlook’ of the country was a lot rosier than it is now.

This of course isn’t meant to say that Canada is not in some difficulty as far our immediate economic outlook is concerned, and the economic recovery from COVID19 is going to be a rocky one. What we can see in this though is that demand continues to outstrip supply with homes in Canada, and that there continues to be qualified buyers for all of these homes that are selling.

That’s good news for everyone, from the economy itself (real estate is a huge economic driver in certain parts of the country, and always will be) to every single realtor working in Canada. It’s not making the business any less competitive for real estate agents in Canada, however, and it’s for that reason that our online real estate lead generator here at Real Estate Leads has the value it does for realtors who are looking for the best and most effective ways to get a larger slice of the pie, as the expression goes.

But let’s get right back to having a more in depth look at the what and why of July being this record breaking month for home sales in Canada.

62K+ Sold

62,355 homes is a lot of homes, and that’s the number attached to the money sales figure record for July according to the CREA. Sales in July were up 30.5 per cent compared with the same month a year ago and up 26% from June, rebounding from lows earlier in the year when the market entered a real freeze on account of the COVID 19 pandemic.

The association said the sales came as the actual national average price for homes sold in July reached up to $571,500, another record and up 14.3% from the same month last year. The industry consensus on this is that this is in large part a natural bounce back response with activity that otherwise would have happened earlier in the year.

We should keep in mind that we were heading into the tightest spring market in almost 20 years before the pandemic began and everything went amok.

We can attribute a lot of this to a number of factors that are fairly common amongst all prospective new home buyers; a new-found importance of home, the lack of a daily commute for many, a desire for more outdoor and personal space, room for a home office, and so on and so forth. People want to put down roots like always, and while their priorities have shifted it still equates to homes being bought and sold the same way as always.