It’s been a year since the COVID-19 outbreak came about and we’re beginning to slowly see the light at the end of the tunnel while its effects still continue to be felt throughout the economy. As we move forward, we must continue to persevere as we adapt to the new normal. 

Since the onset of the pandemic, experts from different fields tried to beat uncertainty by predicting how the pandemic will shape our society. While some predictions hit the bull’s eye, trends still emerge that tend to shock markets. 

One of the trends that developed right before our eyes is the hot real estate market. The global pandemic definitely changed how people are living and also made an impact on where people are living. If you’re a first-time home buyer, looking to upgrade your home or considering downsizing, know these relevant updates in the mortgage and real estate market to help you better prepare for your home buying quest.

Canadian Real Estate Market Exceeded Expectations

Predictions on the housing market were made at the height of great uncertainty amidst the pandemic. Based on forecasts from earlier parts of last year, Canadian house prices should have fallen by around 5-20% lower than the pre-pandemic levels.

However, the opposite happened. The housing market became even hotter and has become the hope for economic recovery. In September, it even surpassed the $600,000 average home price for the first time ever, reaching 18% as compared to the previous year. Real estate experts were surprised, for this wouldn’t have been the case under an economic recession.

What’s so surprising and what’s it to you as home buyers?

Unexpectedly strong home sales and prices

The expensive housing market became more costly than ever. This surprised real estate experts as much as this might’ve surprised you.

Prices of homes across Canada have been climbing. According to Canadian Real Estate Association (CREA), benchmark prices hit $676,600 in January, up to 13.5% higher in the past year. Surprisingly, Canada isn’t alone and home prices are also rising globally.

Surprisingly high level of housing activity

Despite rising prices, housing activities have been stronger than ever. Listings have recovered, while sales have set record-high levels, with an 11.1% increase from 2019.

Experts say that although prices are soaring, affordability still remains because of low mortgage rates set by the Bank of Canada.

Reasons Why the Housing Market is Still Soaring

Although the Canadian national government introduced new rules on mortgages “to protect future home buyers and reduce risks” last June, the market still went beyond control and exceeded both expectations and predictions. Believe it or not, your responses and behaviour as home buyers play a major role in this!

Pent-up demand

As early as August last year, the pent-up demand for homes was a major driving force for real estate. When the market nearly closed off last year with hard restrictions in place, a pent-up buyer demand arose. This intensified as the new normal pushed people to reconsider their living situations, whether it’s choosing to enter the urban exodus or upsize their homes.

Buyers still need to brace themselves for the long-run. This pent-up demand is definitely outpacing the house inventories in Ontario, driving prices higher, while limiting options for homes. To keep up, book a consultation today with a mortgage broker, to know how you can afford a home in a financially secured manner.

Low mortgage rates

The move that started putting the housing market in a hot situation took place when the Bank of Canada lowered interest rates in March 2020 to a record low of 0.25%, just to support the economy during the pandemic. Since then, Canadian mortgage rates remained low, but not without small increases. As of March, the current and lowest rate for a five-year fixed rate mortgage, the most common Canadian mortgage, climbed to 1.64% according to Ratehub.ca. Yet, with home loans still at low levels, the market’s expected to remain active in the coming months.

As a result of low mortgage rates, there’s been a surge of people wanting to lock-in their mortgage pre-approval rates and renew their mortgages. People are still taking advantage of these currently low mortgages.

Getting the best mortgage rates is an important step in buying a home. More than comparing current mortgage rates, knowing the best mortgage deal that’s compatible with your situation’s the most secure way for you to buy a home. Partner up with a mortgage broker to help you learn more about Canadian mortgages and get the best deals for you.

Uneven impact of the pandemic to income groups

Although the pandemic and its effects are  global, impacts differ according to income groups. The pandemic didn’t hit high-income earners as much and was even able to save more than the previous year. They also suffered less from unemployment, had more disposable income and became more mobile, thereby curbing the impacts of the pandemic. When combined with ultralow current mortgage rates, it’s not a wonder that the market remained active.

Its effect? Housing price increases have been more evident among high-priced homes.

Even though income’s a major qualifier in affording to buy a home, there are still ways you could explore, so as to be able to save up for a down payment and qualify for a mortgage pre-approval. We’re here to help you!

Beat the Uncertainty and Plan Ahead

Over the past year, the COVID-19 pandemic has been a great teacher to almost all industries, especially to the house and mortgage market, including home buyers, families paying for their homes, sellers and lenders. For more than a year already, we’ve been continuously adapting and trying to define what the new normal is.

For experts, forecasting the market has been hard under normal circumstances and it’s been even harder amid the unprecedented global crisis. Just imagine what it’s like to be a first-time home buyer in the new normal!

Fear not, because we’re here to help you! Even through uncertainty and unpredictability, everything starts with a plan.

Daisy Raouph, a trusted mortgage broker and financial security advisor can help you come up with a home buying plan and get the best mortgage deals. Book your consultation today!

Get started with Daisy Raouph today