2020 has been an interesting year, and definitely one that we will never forget. When everyone started to realize the severity of the pandemic back in mid-March, people started to panic. Businesses started shutting down, and literally millions of people were either laid off, or experienced significant cuts to their income. We had no idea of what to expect moving forward. Real estate sales plummeted by over 60%. Many who were selling their homes pulled their listings, and many who were actively searching for a new home had put their search on hold. Everyone was in panic mode, and talks of a real estate crash flourished.
While the number of buyers plummeted, so did the number of listings. The ratio of buyers to sellers remained in line, which is what has kept real estate values from plummeting.
Consumer Confidence Growing
Consumer confidence continues to grow as we slowly return to normal. Many who were laid off are now returning to work, and many who had faced cuts to their income are seeing it return. With spring and early summer being the hottest time for the real estate market, the timing couldn’t be more perfect.
CMHC Predicts Housing Market Crash
Despite the growing confidence, CMHC is predicting that the Canadian housing market will tank by up to 18%. They are also predicting that it will return to pre-COVID-19 levels by 2022. Despite their prediction of a crash, they recently introduced new guidelines which will reduce the maximum mortgage amount a homebuyer will qualify for.
Which leads me to this question:
If they really do believe that the market is going to tank, then why would they be introducing new guidelines to tighten it?
Their move contradicts their prediction and does not make any sense. This makes me wonder… do they REALLY believe that it’s going to tank? Hmmmmmmm
Let’s say for a moment that CMHC is correct on their predictions. The market will tank by 18%, and then rebound to pre-covid levels by 2022.
Did you lose money by buying now?
You would only lose if you sold when the market is down. But if you buy right now, will you really sell prior to 2022? For 99% + of homebuyers, they answer is no. Unless you sell, then you have not lost a thing.
That’s IF they are right… but I’ll be bold enough to say that they are not.
The Real Estate Market Is Heating Up!
Heading into March, the real estate market was hot, and as we headed toward spring, many were getting excited to buy. This of course ended with the start of the pandemic. These buyers and sellers did not disappear. They only postponed their plans. As the pandemic played out, the pent–up demand for real estate continued to grow.
As consumer confidence builds, many who were sitting on the sidelines are now starting to get that itch to buy. Over the past couple of weeks, we have been receiving an influx of requests for mortgage pre-approvals. Far more than what we would normally receive for this time of year. People are starting to get excited about the real estate market, and many are now ready to come out of the woodwork and resume their search.
Now that we’re starting to see more active buyers, the competition to buy real estate is becoming fierce. The more the competition, the more multiple offers, and the harder it becomes to purchase a new home. Finance conditions may need to be either reduced, or eliminated if you want to have a shot of having your offer accepted. Back in 2016 and 2017, it was extremely difficult to purchase a home without a finance condition, and it’s starting to get to that point again.
The Window of Opportunity is Closing
For more than two months, I’ve been mentioning that there is a window of opportunity to buy before the real estate market starts to take off again. With consumer confidence growing, this window of opportunity is closing fast however. It’s just a matter of time before the market starts booming. As long as everyone is careful, and our COVID numbers continue to decline, then this is exactly what can be expected.
Mortgage Rates Hit New Record Lows
On top of everything else, mortgage rates continue to fall, and have now reached new record lows, with 5 year fixed rates now as low as 1.94% for insured mortgages. It’s likely that these rates will still fall a bit further yet. There is room for mortgage lenders to lower them further, and as their confidence in the market continues to build along with consumer confidence, we will seem them come down a bit further yet.
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The Paul Meredith Team will be donating $250 to local food banks for every mortgage we fund from April 30-July 31st, 2020.
With well over one million Canadians now out of work, the food banks need our help more than ever.
For this period in 2019, we closed 93 mortgages, which would have meant a donation of $23,250! We want to exceed this number this year! Regardless of whether you are purchasing, refinancing, or have a mortgage coming up for renewal, all closed mortgages closed through the Paul Meredith Team will add to the total donated.