Canadians Are (Still) Buying Properties Amid COVID-19

Buying properties

When the pandemic struck in late 2019 and wreaked havoc across the globe mid-first quarter of 2021, the outlook towards the Canadian housing industry was bleak. Real estate has plunged and interest rates for mortgages dipped placing the ownership of properties in almost dire straits. The reason for this is simple: the pandemic caused social contacts to cease creating a vacuum that affected most of the country’s businesses that involved physical or face-to-face interaction.

Moreover, new immigrants, foreign students, and backpackers dwindled in number because of closed borders. This resulted in a significant drop either in rental businesses or in bed-and-breakfast stay-ins and forced owners to either sell their properties or to convert their homes into a virtual office and meet the requirements of the ‘new normal.

The topic for today’s article will be a diversion from what our past takeaways had presented. This is important to know because everything about this subject matter will have to do with mortgages and credit scores, more particularly on interest rates and the inevitable ‘real estate bubble’ that this might lead into.

House-Buying Frenzy in Canada

The incumbent president and chief executive, Evan Siddall, of Canada Mortgage and Housing Corporation (CMHC), stated that the housing industry in Canada might fall by 18% due to the effects of the pandemic. This report came out on the 5th of March, 2021. One factor cited was most of the high-earning members of society were not as severely affected as compared to their lesser-earning fellow Canadians.

Another reason was many Canadians, who were restricted from attending social gatherings or advised from going outside their residences (i.e. working from home instead of being in the office) resulted in ‘unspent money being accumulated. Hence, these people decided to invest their savings by purchasing houses because it was advantageous (due to low-interest rates) and many of these buyers belonged to the ‘yuppies’ (young professionals) segment of society (aged 30 to 35 years old) who want to have their residences.

Ironically, the pandemic – instead of scaring away property investors – encouraged the real estate sector to boom instead of to bust because the loan on a home mortgage, together with its accompanying low-interest rate, became affordable to first-time house buyers. As demand for housing pushed forward aggressively with buyers willing to part with their hard-earned savings, the sellers were left with no choice but to give in to their request. As a result, many housing units were sold and this created speculations about another ‘property bubble’ in the offing.

Highlights in Canada Housing amidst the Pandemic

It is interesting to note the following benchmarks on Canadian house purchases despite the pandemic intrusion. The following is a result of a survey conducted by Royal Le Page on the 25th of February, 2021:
a. 68% of people aged between 25 and 35 years old that are not yet homeowners plan to purchase their dream houses within the next 5 years

b. 72% of the respondents stated that they feel secure about their outlook in the short-term

c. 40% of the respondents stated that their savings grew amidst the pandemic scourge

d. The survey conducted by Royal Le Page included Canada national, regional, and city-wide
overall outlook

This survey also serves as an excellent reference for first-time homeowners to know where is the best place to get a mortgage loan with favorable terms and conditions located.

Current Trend in Canada Real Estate

To provide you with a bird’ eye view of what is trending across Canada at the moment, read through the following insight report. These are data taken from some regions that are experiencing a sudden sales spike in the real estate sector:

a. Ontario – people aged between 25 and 35 years old own their homes and those who
don’t yet own one will purchase a property within the next five years

b. Greater Toronto Area – 46% of surveyed individuals stated that they are most likely to
move into a less densely populated area

c. Ottawa – a sudden surge in property purchases caused a market appreciation in the housing
industry where the majority of buyers are opting to acquire a large property

d. Quebec – low-interest rates, remote work capability, and long-term excellent quality of life
investment pushed up property sales. Most of these purchases were from people
aged 25 to 35 years old

There are still some regions not mentioned in this article that likewise give testimony to the growing number of house purchases in Canada from the younger segment of society. This, along with other data, shows that confidence in the country’s real estate sector is getting stronger. First-time house buyers are looking forward to low-cost mortgages that appeal not only to their budgets but also to their desires to have real value-for-money residential ownerships.

Final Thoughts

Canada’s housing sector is performing tremendously at the moment. Despite the pandemic, Canadians – more particularly, the young professionals – are buying houses because of low-interest rates and affordable property market prices. It is, however, hinted that this surge in the real estate sector might create a ‘property ownership bubble’ resulting in bigger problems instead. Many regions in Canada are experiencing an unusual growth spurt in residential purchases despite an increase in the market value of housing units.

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