Real estate at the time of COVID-19
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Emmanuel Paquin
- 3 November 2021
- Real estate market, Uncategorized
- 0
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| Photo by Brian McGowan on Unsplash |
In two weeks, the world has changed dramatically. We are now faced with massive shutdowns and shutdowns, cancelled sports seasons, stock market crashes and fights in the aisles of Costco over toilet paper… COVID-19, or Coronavirus, has affected everyone internationally in one way or another. But will the fallout from this global virus eventually affect the Quebec real estate market?
Yes, it does.
But exactly how? For the moment, no one knows for sure.
There are several scenarios that could play out in the real estate market over the coming weeks and months. With panic and uncertainty in the market, buyers and sellers need to look at the facts and figures to determine if this is a good time to buy or sell.
In March alone, the Bank of Canada reduced the policy rate to 0.75% and the five major banks reduced the prime rate, which is the main benchmark on which mortgages and variable rate lines of credit are based, by 1%. The Office of the Superintendent of Financial Institutions (OSFI), the federal banking regulator, had also planned to recalculate and reduce the qualifying rate for mortgages, but has now put that plan on hold.
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| Image by Nattanan Kanchanaprat from Pixabay |
The market could become even more aggressive.
There is no doubt that the real estate market in the Montreal area has a low inventory of properties for sale. The Greater Montréal Real Estate Board reports that the median price of a single-family home on the Island of Montréal increased by almost 24 per cent, or $571,800, in the last year. A month ago, this increase was 8%, or $526,800.
In January, the average time to sell a property was 71 days. In February, this figure rose to 59 days. As of March 20, this has been reduced to 56 days for the current month.
The market is still very active in Montreal.
Buyers are looking at record sales prices in the Greater Toronto Area and deciding to invest in the Montreal market, where real estate is relatively cheaper. At the same time, there are fewer sellers putting their homes on the market for various reasons. This creates a pressure on the market that is to the advantage of the seller.
But what if these vendors decide that there is no urgency to sell and decide to wait until the Coronavirus is behind us? Fewer homes on the market with the same number of buyers could cause an even worse housing frenzy.
As a real estate broker in the area, I tend to believe that the high-end, $700,000+ home segment will gain market share over the other segments. For the first quarter of 2020 alone, this segment accounted for 31 percent of home sales, compared to 26 percent in for the same quarter in 2019. Buyers in this segment who are considering selling their homes this year may want to do so during the spring rush.
The market may also be flooded with supply and there will be fewer buyers.
An alternative scenario could be that sellers believe we are in a recession and rush to put their homes on the market in anticipation of falling prices. After all, the Montreal market has gone up quite a bit and it’s always good to sell at a high price.
At the same time, buyers may decide that going out in public for open houses and tours could expose them to coronavirus and may decide to put their home search on hold for a few weeks. If supply increases and demand decreases, prices will fall rapidly and the competitiveness of the current market will take a breather, making it easier for buyers to access the home of their dreams.
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| Image by mohamed Hassan from Pixabay |
Or a balance can be established, a status quo.
We will most likely see a combination of these two scenarios as we enter the spring market – the traditionally strong time for home buying and selling. There will be an increase in the number of vendors and continued demand from local and outside buyers. As a result, the market will likely move at a more balanced and reasonable pace than in recent months.
One of the most important things to consider is the experience of a local real estate broker who follows the market closely. If you are selling, a proper marketing plan is necessary to maximize your selling price in the current market. If you’re buying, you need to have an idea of neighborhood trends, potential buying strategies and strong negotiators working for you.
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| Image by Peggy und Marco Lachmann-Anke from Pixabay |
Real estate is not only a career for me, it is also a passion. That’s why I follow the market closely. It will be my pleasure to assist you in your efforts, from start to finish, by providing you with all the information and tools you need to achieve your selling or buying goals in a rapidly changing market.
*Sources APCIQ.com
