Will it be their chance to finally climb the property ladder?
The answer, according to housing market observers, is both complicated and surrounded by uncertainty.
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If you look at them from a bird’s-eye view, residential property prices in Canada currently seem frozen in time.
The national average home price fell 1.3% in April compared to the same month last year, the Canadian Real Estate Association (CREA) announced Friday.
CREA’s house price index, which adjusts to changes in the composition of the homes sold, only decreased by 0.6% between March and April and increased by 6.4% compared to April 2019 , reflecting strong price increases for pre-coronaviruses.
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In general, house prices do not move much, as supply and demand for houses have collapsed roughly in tandem, according to economists.
Sales of existing homes across Canada fell 58% last month from the same period last year, but the number of newly listed properties fell 59% from the previous year. last year. As a result, the sales-to-listings ratio – a key metric used to assess whether market conditions favor buyers or sellers – is currently 62%, down from 64% in March and 65% in February.
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Normally, you need a sales / listing ratio of 35% or less to have what insiders call a buyer’s market. When there are many homes available for sale and relatively few buyers, the reasoning goes, buyers can be demanding and have more bargaining power.
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According to this measure, the Canadian housing market would appear to be firmly in the territory of sellers.
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On the other hand, CREA also said that nationally, it would currently take about nine months to liquidate the current inventory of homes on the market at the current rate of sales. It was up from about four months in March.
This means that “persistent lists are not accepted,” said BMO economist Robert Kavcic in a note to customers.
“It should be noted that supply for the months peaked at 9.7 during the financial crisis in late 2008, and these levels usually suggest a decline in prices,” he added.
But, he warned, with the majority of buyers and sellers waiting, “these measures are becoming a little less reliable.”
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However, as everyone knows, all real estate is local. And when you zoom in on specific neighborhoods and market segments, you can find buying opportunities, says Lauren Haw, CEO of Zoocasa.
“There are absolutely supply side opportunities, especially in the urban cores, where we see slightly higher inventory in the condominium market, “Haw told Global News.
In some areas of downtown Toronto, for example, median condominium prices fell more than 10%, falling more than $ 50,000, according to a recent analysis by Zoocasa.
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On the other hand, supply for other market segments has practically dried up, added Haw.
” Family homes in large school districts – they’re not really listed at the moment, ”said Haw.
With children at home after school, it’s a difficult time for families to put a house on the market, she added. Prospective home sellers who can afford to stay put do so, she noted.
It’s even in the condominium market, according to Pauline Lierman of the research firm Urbanation. In Toronto, only single units and one-bedroom condos valued at less than $ 500,000 saw their share of sales volumes increase between March and April, with the share of the most expensive units remaining stable or declining.
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Wealthier condo owners who can afford to wait for the current crisis are lagging behind, said Lierman. And this, in turn, can affect the median value of properties, with average price declines at least in part reflecting the relatively higher number of cheaper condos to sell.
Haw’s advice to home buyers is to determine where they would like to live and in what types of properties for at least the next five years. Then, she says, keep an eye out to see if something that fits their needs becomes available.
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” The interest rates are really low and you can enter a market where some of the sellers are very motivated, “she said.
Some sellers may be forced to unload property because they have already bought a new house, she said. Some real estate investors may also try to sell short-term rentals that they can no longer afford once reservations have dried up.
There may soon be many more motivated sellers on the market, according to Robert McLister, founder of the price comparison site RateSpy.com.
“There could be more people who have to set sail in the coming months,” he said.
Canadians whose jobs are not coming back or who lack mortgage deferrals may be forced to put their properties on the market, which could put pressure on prices, he said.
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The sales / listing ratio, he added, will be a key indicator to watch to see where the market is headed.
At the moment, there is a major disagreement among economists over where it could be.
Lierman’s advice for buyers is to trust an experienced real estate agent who knows the area they want to buy to keep them informed of market signals.
“Find a specialist in your area and do your due diligence. “
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