COVID-19 and the real estate market: trends and opportunities

17 February 2021 by National Bank
Housing Market Opportunities During Covid-19 Pandemic

The past year has altered the country’s economy, with no exception to the real estate market. Depending on your current situation, the next few months may present you with opportunities to seize. Is it a good time to buy or to sell? Here are a few things to consider before you make a decision.

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1. Does your home meet your needs?

These may have changed due to COVID-19, and the place where you live may no longer meet your needs. While buying property is a major financial decision, it’s first and foremost a life decision.

“That’s why it’s important to evaluate your personal financial situation and to seek advice from professionals who will be able to guide you through these hectic times. They could help you find the right financing solution as well as answer your questions about a rapidly changing economic environment,” points out Jonathan Haziza, Senior Manager, Retail Financing Solutions at National Bank.

2. How is the real estate market changing in your area?

The media will often point out major trends in Canadian real estate, but the situation may in fact be quite different in your particular area.

The effects of the crisis on the real estate market may vary in your area if you consider the strength of the market before the crisis, the jobs that have been lost, and the strength of the economic recovery. While you’ll still see overbidding on some properties in Montreal, this may not be the case in your area.

Before deciding to sell your property, take the time to research the strength of the market in your area. Most importantly, make sure you have a clear idea of how much your next property might cost. It is possible that you’ll get an excellent price for your current residence, but if you want to buy another house at a much higher price, you have to make sure you can afford it first.

3. Has the real estate market started to recover?

According to the Canadian Real Estate Association (CREA), property sales in Canada increased 7.2% from November to December 2020. For a fifth straight month, national sales remained at an all-time high, going up by more than 55,000 homes.

It’s safe to say that the Canadian real estate market is booming, despite the COVID-19 pandemic. Canada had a record year of property sales in 2020, with a 12.6% increase in transactions compared to 2019.

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4. Have mortgage rates gone down?

Since the beginning of the pandemic, the Bank of Canada has lowered its key interest rate three times to make it go from 1.75% to 0.25%. As a result, mortgage interest rates have reached a historically low level. According to Statistics Canada, as of November 1, 2020, the average interest rate offered by Canadian banks for a 5-year fixed mortgage was 2.01%, which is a decrease of 0.7% since April 2020.

While National Bank economists don’t expect an increase to the Bank of Canada’s key interest rate before the end of 2021, there are many other factors that can affect mortgage interest rates, like the type and cost of the loan requested.  That’s why it’s hard to predict how they’ll change in the future, and you shouldn’t hesitate to seize an opportunity if you see one.

However, no matter what the mortgage rate trends and opportunities may be, the priority still remains having the means to buy a home. If you’re financially prepared and the opportunity is right for you, the trends will ultimately have little impact on your decision.

5. What about mortgage loan insurance?

Recently, the Canadian Mortgage and Housing Corporation (CMHC) tightened their criteria for qualifying for mortgage insurance. However, these tougher rules are specific to the CMHC and other solutions are available with other mortgage insurers. 

Speak with one of our advisors, who will be able to help you find the solution that best suits your needs.

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Can I finance my renovations using my mortgage?

We're here to answer your questions.
Even from a distance.