Whether you are in the market to buy, sell, lease, or rent a home, the uncertainty about what is going to happen to Canada’s real estate market is likely growing as each day goes by. We have created this page to answer questions about COVID-19 (Coronavirus) and our insights on what we predict will happen.
During these uncertain times, planning your real estate goals does not have to stop. Because we take you and your families’ health and safety seriously, we have created a COVID-19 Policy and Procedures for all of our Fivewalls real estate agents. At Fivewalls, we encourage you to keep informed about changes in the market.
If you have a question for us, please email Sarah Johnson at Sarah.Johnson@fivewalls.com and we will include answers for your question on this page.
In what ways will Canada’s real estate market be impacted?
Job stability and demand from foreign buyers will significantly impact sales in Canada’s real estate market. As companies freeze hiring and continue to do lay-offs, people may choose to delay large purchases and if there are fewer jobs, there will also be less activity in people moving to other cities and buying new homes. COVID-19 will leave many industries with a long time to recover: restaurants, travel and tourism, oil and gas, retail, and automobiles, to name a few of the obvious ones. This will mean fewer people buying homes and investments given the economic difficulties that this pandemic has caused. Certain provinces like Alberta will be hit much harder than others due to the oil crisis that is also happening alongside the COVID-19 pandemic.
Given Canada’s welcoming immigration policies, demand for real estate from foreign buyers are likely limited this year given recent travel bans and severe recessions that international countries will face. Physically, it will be difficult for foreign investors to come to Canada to purchase investment properties. From an investment perspective, the outlook of the global economy is looking grim and many investors are trying to recover from losses in the stock market. There will be less cash among foreign buyers.
Will real estate prices fall because of COVID-19?
We expect home prices to drop or stay flat from April to October given the global economic uncertainty. Once unemployment reaches a ‘normal’ level at roughly 4%, we predict that home prices could start to rise again. What is uncertain at this point is the psychological impact that the pandemic will have on buyers and sellers. This could mean for a longer recovery in real estate sales.
The other thing we need to consider are first-time buyers who will still want to buy a home despite the economic outlook. Demand from first-time buyers could continue to fuel Canada’s real estate market and prices could stay flat. We are uncertain about the economic impact of first-time buyers.
See our predictions on individual Canadian cities Predictions on real estate prices in top Canadian cities.
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Is it still safe to view homes?
At the time this question was written (April 2020), we do not encourage viewing homes in person unless you have seen virtual tours and pictures of every room. We advise you to view less homes, only see the ones you really like and prioritize safety during this time. If you are interested in a property, ask your real estate agent to do a live video showing. Please note that we are also asking our real estate agents to practice social distancing and they may encourage you not to view a home, especially if you or you are living with family members who are immunocompromised.
Should I hold off on buying a property right now?
There are many reasons to buy a property right now including low interest rates. We encourage you to stay informed about the market and talk to your employer (or clients if you are self-employed) to ensure that you will have a steady stream of income over the next 6 months. If you feel uncertain about your employment, you may want to hold off on a big real estate purchase. Many sellers are also holding their properties and waiting until COVID-19 is over. This means that if you don’t see anything in the market that you like right now, there is no harm in waiting for a surge of real estate listings to come when the pandemic ends.
As a seller, what should I expect if I list my property on the market?
There will be less people coming to view your home, which, at this point is likely a safer option. Make sure you work with a real estate agent who is willing to provide 3D listings and virtual tools so that buyers can see your property without leaving their homes.
Prices will not be as competitive and buyers may try to write you low-ball offers to test your limits. There are serious buyers who are trying to get a good deal right now. We do not expect sellers to be getting as many multiple offers as the market may have experienced in late-2019.
Should I hold off on selling my property right now?
If you are able to wait until COVID-19 is almost over in your province, we recommend doing so because there will be less buyers given the fact that many people are staying at home. We also anticipate that buyers will go in with lower offers so you may be leaving money on the table. On the other hand, the economic situation is uncertain and it is unsure how long you would have to wait.
If you are in a rush to sell, then we recommend doing so immediately because we are uncertain if the Government will place additional restrictions in social interactions. As the rate of COVID-19 infections increase, buyers are even less likely to go outside. On the other hand, our data from our real estate agent partners show that many sellers are holding on to their listings and waiting until summer or fall to sell. This means that if you sell now, you will face less competition on the market.
If your home is in a condition that requires renovations, then we recommend selling sooner than later because you may face more competition from other sellers who are waiting until COVID-19 is over.
I recently sold my property, is my buyer allowed to back out of the deal because of COVID-19?
Your buyer is legally obligated to fulfill the conditions of the deal and move forward with closing requirements. The provincial governments have listed lawyers, banks and real estate agents as essential businesses and you will still be able to contact the necessary parties to close the deal.
As a homeowner, are there any Government grants that could help me at this time if my income has been reduced?
If you have an insured mortgage, your bank may allow you to defer your mortgage payments for up to 6 months. However, you will still owe interest on those mortgage payments. For uninsured mortgages, check with your bank to see what your options are.
The Bank of Canada has dropped their interest rates to 0.25%. Why haven’t mortgage rates decreased?
Due to the increase in demand for loams, banks are in a liquidity crisis. Mortgage rates have not decreased in accordance to the drops from the Bank of Canada.
The Bank of Canada has dropped their interest rates to 0.25%. Does that make it easier for me to qualify for a larger mortgage under the stress test?
After the Bank of Canada’s second emergency interest rate cut on March 13, they have paused the changes to lower the stress test. This means that people will not be able to qualify for a larger mortgage due to the multiple emergency rate cuts from the Bank of Canada. It is clear that the Bank of Canada is taking a conservative approach to ensure that people are purchasing homes if they can really bear the risk. Their conservative approach has shielded Canadian mortgages through previous economic shocks.
I recently got laid off, will I still be able to get a mortgage?
Typically if your lender cannot see that you have steady income, there are unlikely to approve a mortgage without a guarantor. Even if you bought a home before you got laid off, the bank is likely not to go forward with your mortgage application if the closing date is after your lay-off.
What will be the impact from Airbnb properties that are receiving no income?
As of April 2020, we are seeing many Airbnbs in downtown Toronto condo buildings being listed for sale or long-term rentals. We have seen reports that predict tourism and travel to recover in mid-2021. For many owners of multiple Airbnb units who were already struggling since the beginning of 2020, 18 months with little or no income from Airbnb could be catastrophic. We expect to see more supply of rentals as these units go on the market. However, the impact on rental prices remains unclear.
Can I still sell my tenanted investment property right now?
You can still sell a tenanted investment property. However, if your tenant does not permit showings, you will have a harder time to sell. In addition, you must also write the tenant a note to let them know that it is not an eviction and state the reason you need to sell.
When will real estate go back to normal or bounce back after COVID-19?
We do not know. Currently, experts have been modelling different scenarios but they all come with different timelines. There are the possibilities of a V-shaped, U-shaped or L-shaped growth in the real estate market. We will continue to monitor the real estate market and provide updates as we get more data.
Tips for Home Buyers During The COVID-19 Pandemic
- Set up video conference meetings with your real estate agent
- Virtual showings
- Agents can do a virtual walk-through of the home for you so that you don’t need to physically visit the house
- Schedule personal home viewings
- Schedule a showing with your real estate agent so that you are the only people in the home
- When viewing a home, respect the seller’s space by not touching any personal items. For your safety, we recommend that you don’t go into small spaces, such as, closets and bathrooms.
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Tips for Home Sellers During The COVID-19 Pandemic
- Fivewalls Certified Agents will offer you a 3-tiered showing system:
- Virtual tour
- Scheduled walk around the outside of the home
- If still interested and you are healthy, you will be allowed through the property.
- Set up video conference meetings with your real estate agent. Fivewalls agents are equipped to help you plan to sell your home without meeting in person.
- Consider having your agent give you an estimate on what your home could sell by doing a video walk-through.
- Arrange for all showings to be done via a live streaming video done by your agent.
- Or, let your real estate agent create a viewing schedule so only one small group is viewing the home at a time.
What are Fivewalls real estate agents doing to make sure clients are safe to view homes during the outbreak?
For your safety, we have created a Fivewalls policy and requirements to be a COVID-19 Prepared Agent. This means that real estate agents have demonstrated their ability to provide the following in order to be classified as COVID-19 Prepared:
- Strong knowledge and experience using video conference meetings and software.
- Can provide a sanitary kit including, disinfectant wipes, hand sanitizer & gloves for showings and have enough supplies for their clients.
- Can provide video tours of homes.
Our COVID-19 Prepared Agents have also signed an agreement with us stating that they will provide hand sanitizer before going into a property (or if unavailable, soap and water to wash hands). They have also agreed not to enter any small spaces within the home (i.e. bathroom, walk-in closet, shed, etc.) and ensure clients’ safety during showings. For your safety, our real estate agents may choose not to show homes to kids or elderly people. They will provide detailed videos of the home in the event that clients are not able to attend showings.
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Disclaimer: given that the Coronavirus (COVID-19) has caused shocks to how real estate is operated, please note that the information above could change at any time given that companies are constantly updating their policies in response to the pandemic. Intended to Solicit Buyers or Sellers that are not currently under contract with another real estate brokerage.