COVID-19 pandemic has its huge impact on the Canadian real estate market. According to Canada Mortgage and Housing Corporation (CMHC) the health crisis caused by the COVID-19 pandemic will continue to impact the real estate market.
The Canadian real estate market hit records in July despite the economic uncertainty brought on by the COVID − 19 pandemic and experts have different opinions on how the situation will continue.
The actual national average price of houses sold in July is $571,500, up 14.3% from the same month last year, according to the Canadian Real Estate Association.
Experts’ reviews
According to Royal Bank senior economist Robert Hogue, traditionally, buyers and sellers waited for spring to come in order to activate. This year, spring fever has been pushed back to summer. It is generally quieter season and that’s when containment measures were lifted.
According to other opinion, this increase in real estate market is because of the recommendations to stay at home and also to work from home. Some people want a larger property for their comfort.
From these opinions, we can assume that the situation will remain more or less the same until Christmas.
Kean Birch, associate professor at York University, plans to monitor the extension or end of mortgage payment deferrals. The main concern according to him are consequences of the mortgage payment deferral. When it is over, there could be dramatic situations which would be very unfair.
CEO of the Canada Mortgage and Housing Corporation (CMHC), anticipated a drop in house prices despite “recent activity”. It appears to be the “result of very low interest rates and a sharp reduction in new listings”.
Though Sherry Cooper, chief economist at brokerage firm Dominion Mortgage Centers, called CMHC’s forecast “too pessimistic.” According to numbers, the national average selling price has increased 14.3% year-over-year. The real estate market is helping the economy recover.
As opposed to these predictions, the federal body said that the uncertainty still stands and there could be a drop in the demand due to losses in household income, in particular.
Real Estate sales changes
The Canadian housing market smashed sales and price records in July. It continues to catch up with temporary closures in the spring due to restrictions imposed by public health officials.
But CMHC says that we still can’t notice all the economic shock of the pandemic in the most recent data. There are still risks to prices, sales and new construction projects.
The federal agency also released its results for the three-month period ended June 30. It posted net income of $ 566 million, compared to $ 379 million. The arrears rate stood at 0.34%.
CMHC also declared that insurance settlements have raised by $ 256 million, or 711%, due to increased provisions for COVID-19 claims.
Conclusion
Overall, it will take time for the economic consequences of COVID-19 to fully materialize. The real estate market still remains volatile. But CMHC assures that they are in a good position to overcome all the consequences of the pandemic and to take other steps to support Canadians.