According to Davelle Morrison, the market will be active again in 2021. After another round of winter lockdowns, buyers who didn't move last year and are now working, schooling, or exercising from home will likely crave a change of scenery.
“Ok, you know what, we didn't make a change the first time around, but now we really have to make a change,” Morrison said.
Morrison and Adil Dinani, founder and principal of the Vancouver-based Dinani Group Real Estate Advisors at Royal LePage West Real Estate Services, discuss what home buyers and sellers can expect in 2021 and how to keep the market moving forward.
What happened in 2020?
The year 2020 was unlike any other in housing history. The normally busy spring season began to crumble as the pandemic triggered lockdowns across the country in the second half of March. According to CREA, national home sales dropped 56.8% in April, resulting in the lowest sales total since 1984.
In May and June, the market began to regain its footing, quickly ramping up throughout the summer months. Two major driving forces behind the market's recovery were pent-up buyer demand from the spring and low mortgage rates.
Morrison noticed a surge in condominium demand in her neighbourhood in June, followed by a slowdown in July as more inventory flooded the Toronto market. While the overall market performed exceptionally well in the second half of 2020, in major urban areas, a disparity between condominium and single-family home sales emerged. As many investors offloaded condo units in response to the sluggish rental market, buyers began looking for more space outside of cities.
“If you had a condo on the market in 2020, it was very different than if you had a house on the market,” Morrison said.
Dinani claims that single-family homes are in short supply in the Vancouver area.
Single-family homes continue to lead the way in the Vancouver region, according to Dinani, while the condo segment is gradually regaining traction. Home sales and prices have risen significantly as a result of record-low interest rates and domestic buyers, particularly Millennials looking for low-rise properties.
“Multiple offers have become commonplace across all product types,” Dinani said. “In most segments, we're well above the active listings ratio, indicating a seller's market. In my 15-year career, [it's] one of the strongest seller's markets I've ever seen.”
In total, 551,392 properties changed hands through MLS® Systems in 2020, with the nascent MLS® System being the nascent MLS® System.According to CREA, 551,392 properties changed hands through MLS® Systems in 2020, with the national market posting a 12.6 percent year-over-year increase in sales and setting a new high.Buyers should brace for a busy and competitive market in 2021
There are few signs that the demand for Canadian real estate will slow down anytime soon for home buyers looking to buy this year.
CREA noted in its most recent report that an increase in demand was seen in all parts of the country throughout 2020, even if pricing pressure was not evenly distributed across the country. With the exception of Ontario, where a supply shortage is expected to limit sales, all provinces are expected to see an increase in sales activity in 2021. Morrison explains that, while supply has been growing, it hasn't kept up with demand. Bidding wars erupted again in January, with properties selling for more than the asking price.
“I think demand has gone crazy,” she explained, “partly because people now know they'll have low interest rates for a couple of years.” “Money is cheap right now, which is why you should buy a second home or get your first home.”
Experts expect higher federal immigration targets and returning Canadian expats to contribute to housing demand as global vaccination efforts continue to ramp up.
“Right now, we don't have a lot of that,” Dinani said, “but that is part of the federal commitment that there will be [more immigration] when the borders open up, and there will be a commitment to bringing more people into provinces.” “If you look at energy hubs like Vancouver, Toronto, and Montreal, you can see how this immigration will benefit them.”
For buyers who are concerned about correctly timing the market in response to rising demand and prices, Morrison says the best time to buy is whenever you are ready — no one can perfectly time the market, whether it's real estate or the stock market. While the market is expected to remain strong for the next three months, Dinani believes the market will begin to provide more sustainable growth as life returns to normal in the fall of 2021 and into the winter of 2022.
“The market has risen significantly in the last six months, and there will be a period when it levels out,” he predicted. “Nothing can continue to rise indefinitely. It has to level out at some point, and I expect it to do so.”Sellers can expect serious buyers
Because of the pandemic, buyers are more serious about making an offer than in previous years, according to Morrison. For sellers, this could mean a ban on open houses in many areas of the country, as well as the imposition of physical distancing restrictions, which may result in fewer casual buyers.
“The only reason you're out looking for a property right now is because you actually want to move,” Morrison said, citing COVID-19 as an example. “There are no more open houses [in Toronto], and no one is looking. Those who wish to relocate are serious.”
Dinani explains that local buyers, some of whom are in the younger buyer demographics, have recently driven the Vancouver market. According to him, millennial buyers expect prices to rise over the next two years, motivating those who haven't bought yet to do so within the next 24 months.
“These Millennials are very sophisticated and are looking at what it costs them to rent, and now that we're seeing interest rates that we've never seen before, they're doing a very close analysis,” Dinani said. “In terms of monthly borrowing costs, owning is very similar to renting.”
We could see offices reopening on a part-time basis as early as 2021. According to Morrison, some buyers who have relocated to rural or remote areas may be prompted to purchase a pied-à-terre condo in the city, which will help them cut down on commuting times.
“The smaller condos that didn't sell last year, [buyers] are now going to have to buy something so they have a place to stay during the week when they're working because they won't be able to commute two hours each way,” she said.
In 2020, buyers placed a high value on private outdoor spaces, larger interiors, and space to work from home. According to Morrison, the pandemic will likely continue to influence these preferences among buyers who will still need to spend a lot of time at home this year. She explains that having a desk or a full-fledged home office is one of the most sought-after home features among both renters and home buyers.
“Now that we've had a year of lockdown, you're left wondering what's next. Is it possible that this will happen again in the future? And if it does, [buyers] will want some outdoor space,” Morrison explained.