Home prices are holding up during the coronavirus pandemic despite lockdowns.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The most recent sign of resiliency comes from the Teranet-National Bank House Price Index for April, a composite of 11 major markets, is up 5.3 per cent from a year earlier. ” data-reactid=”33″>The most recent sign of resiliency comes from the Teranet-National Bank House Price Index for April, a composite of 11 major markets, is up 5.3 per cent from a year earlier.
It’s up 1.3 cent compared to the previous month, but the report’s authors acknowledged prices could fall in the months ahead.
“Among the 11 Indexes included in the composite index and the 14 other indexes available, April showed the fewest monthly declines (two out of 25) since last June,” read the report.
“This could obviously change with the economy now thrown into recession by the public-health measures taken to contain the spread of the Covid-19 virus.”
John Lusink, president of Right at Home Realty, also says COVID-19’s effect on home prices has been minimal and sees room for prices to eventually come down.
“For the upcoming months, a significant increase in unemployment rates and the inability for many consumers to meet the criteria to qualify for mortgage loans could put downward pressure on house prices, changing the landscape for Canadians looking to purchase a home,” he said
Right at Home’s data collected weekly from our network of over 5,000 Realtors showed a 54% decline in incoming transactions from across our 12 locations in Ontario month to date.
Lusink says he expects the housing market to rebound at the end of summer as social distancing measures continue to lift.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Another sign that buyers still have an appetite for real estate comes from the Toronto Regional Real Estate Board (TREBB). A new survey found 27 per cent of respondents said they were likely (very likely or somewhat likely) to purchase a home in the next 12 months. ” data-reactid=”61″>Another sign that buyers still have an appetite for real estate comes from the Toronto Regional Real Estate Board (TREBB). A new survey found 27 per cent of respondents said they were likely (very likely or somewhat likely) to purchase a home in the next 12 months.
That’s lower than the same time last year (31 per cent), although TREBB says it’s relatively in line with the five-year trend. But, according to the survey, those buyers shouldn’t expect a flood of properties from desperate sellers to hit the market because only 17 per cent said they planned to sell, compared to 32 per cent last year.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For now, mortgage deferrals mean owners can hold on to their homes and government financial assistance can help those whose income has taken a hit to keep their heads above water. But when those programs end, the Canada Mortgage and Housing Corporation (CMHC) says our addiction to debt will come back to haunt us.” data-reactid=”63″>For now, mortgage deferrals mean owners can hold on to their homes and government financial assistance can help those whose income has taken a hit to keep their heads above water. But when those programs end, the Canada Mortgage and Housing Corporation (CMHC) says our addiction to debt will come back to haunt us.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“Looking at debt multiples of disposable income, that measure will climb from 176 per cent in late 2019 to well over 200 per cent through 2021,” Evan Siddall, CHMC CEO, said during testimony to the House of Commons finance committee Tuesday.” data-reactid=”64″>“Looking at debt multiples of disposable income, that measure will climb from 176 per cent in late 2019 to well over 200 per cent through 2021,” Evan Siddall, CHMC CEO, said during testimony to the House of Commons finance committee Tuesday.
“Moreover, CMHC is now forecasting a decline in average house prices of 9 – 18 per cent in the coming 12 months. The resulting combination of higher mortgage debt, declining house prices and increased unemployment is cause for concern for Canada’s longer-term financial stability.”
The Bank for International Settlements says a debt-to-GDP ratio above 80 per cent acts as a drag on economic growth. Prior to the pandemic, Canada’s was 99 per cent. Siddall says he expects increasing borrowing and a declining GDP to push it up to above 115 per cent in Q2 2020 and 130 per cent in Q2.
Siddall also proposed raising the minimum downpayment on a home from 5 per cent to 10 per cent to avoid exposing young people to losses from falling home prices.
Karl Schamotta, Chief Market Strategist at Cambridge Global Payments, says since Siddall’s term is coming to a close at the end of the year, his words should be taken with a grain of salt. Schamotta sees two possibilities.
“Siddall could be right, and we see a price drop that depresses growth and generates major headwinds for the Canadian dollar, or – just as in 2008 – policymakers could blink and inject enough cash to stabilize prices and kick the can further down the road,” said Schamotta.
“We need to consider both, but given Canada’s highly-oligarchic financial system and political structure, the latter seems like a very real possibility.”
CMHC is also calling for urgent action to accelerate the supply of rental housing.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.” data-reactid=”72″>Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Download the Yahoo Finance app, available for Apple and Android.” data-reactid=”73″>Download the Yahoo Finance app, available for Apple and Android.
Toronto and Vancouver Real Estate Inventory May Get A Boost From AirBNB Slowdown – Better Dwelling
Canadian real estate markets may be getting another inventory headwind soon. National Bank of Canada (NBC) research estimates AirBNB hosts may contribute to oversupply later this year. As the slowdown impacts hosts, many may be incentivized to sell. By their estimates, just a quarter of hosts selling would cause inventory in cities like Toronto and Vancouver to swell.
AirBNB and Housing Inventory
AirBNB helps homeowners take existing housing stock and convert it to short-term rentals. Rather than staying in hotels, travelers can now stay in existing non-hotel stock. At first, it wasn’t a big issue when just a few people were doing it. As the platform expanded, people began buying additional housing just to operate short-term rentals. By repurposing housing that would otherwise be long-term units, cities now need additional housing. Basically, short-term rentals lead to an inventory squeeze, pushing rents and prices higher. Temporarily at least, for as long as the squeeze persists. That squeeze could end as quickly as travel did.
The Travel Industry Expects A Big Slowdown
The travel industry doesn’t expect travel to recover quickly from the pandemic. The US has approved some routes cutting plane traffic up to 90% until September. The IATA, the trade association for international airlines, also doesn’t see traffic returning to 2019 levels until at least 2023 – at the earliest. What does this mean? Fewer users of short-term rentals, and more competition from hotels for those travelers. All of this can have a big impact on real estate inventory, according to NBC numbers.
Canada’s Biggest Real Estate Markets May See Inventory Spike
If just a quarter of AirBNB inventory is sold off, NBC sees a lot more real estate listings on the market. In Vancouver, the bank estimates real estate listings would rise 12%. Montreal would see an increase of 27% in resale listings. Toronto is another story though, with inventory forecasted to rise a whopping 34%. That’s with just 25% of AirBNB exiting as hosts.
AirBNB Boost To Canadian Real Estate Inventory
The potential increase in real estate listings if 25% of AirBNB properties were listed for sale.
Source: National Bank of Canada, Better Dwelling.
The boost is another headwind for inventory rising later in the year. Inventory was already expected to rise in the coming few months. NBC economists believe this would be “exacerbating oversupply in the coming months.”
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How Is The Real Estate Market In Muskoka Post COVID19 – Hunters Bay Radio
In a brand new video podcast series, Gerry Lantaigne with Sutton Group – Muskoka Realty discuses the world of real estate in Muskoka during the Coronavirus pandemic.
Join Gerry every month as he updates you on The State of Real Estate
Watch the inaugural episode here:
May real estate sales in Powell River promising, says board president – My Powell River Now
Powell River’s real estate market is warming up.
Powell River/Sunshine Coast Real Estate Board president, Neil Frost, said May sales were “surprisingly good.”
“We were up significantly from April,” Frost said. “April was very poor, but of course that was obviously due to the pandemic and state of emergency declared in B.C.”
Frost said there were 23 residential sales plus two vacant land sales in the city last month, which is up from 11 total sales in April.
He added that those numbers are promising, especially in these uncertain times.
“March started out great and in the last half (of the month) really trailed off, and then April is where we’ve really felt the effects,” Frost said.
“May and June have already been very busy. Year-over-year, we’re looking at 41 sales for May 2019 and we had 23 for May 2020, and those are residential sales. Total sales for May 2020 was 25 total sales compared to 46 total sales for 2019.
While down from last year, Frost said 25 sales in a month is “pretty strong for our market.”
Affordability is helping to drive the market locally. Frost said the average home price is roughly $390,000.
“We’ve even seen some competing offers and property selling for over-list price,” Frost said.
The pandemic has changed the way realtors do their job, Frost said: “Worksafe BC has released a series of protocols and each office has also developed their protocols and basically, we’re trying to avoid in-person showings as much as possible.”
That said, serious buyers want to see a home in person before making the biggest purchase of their lives.
“We do take precautions, depending on the seller’s threshold,” Frost said. “Definitely sanitizing, and gloves, and facemasks if requested, (physical) distancing at all times, buyers are asked to keep their hands in their pockets and not touch anything in the homes, limit the number of people inside a home at a time. Really trying to restrict it to the serious buyers or the people that are going to be on title.”
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