The Covid-19 pandemic continues and while vaccination is well underway, we are still dealing with the variants and a potential 4th wave is coming. What impact will this fourth phase of the pandemic have on the real estate market? We have witnessed the overheating of the real estate market in the last year, the market being definitely to the advantage of the sellers who were even offered prices above the posted price. The following blog post will attempt to give you some news on the real estate market in order to have a clearer idea of what we will bring in the next few months.
Royale LePage confirms in the results of its market forecast study that "the aggregate price of properties in Canada is expected to increase by 5.5% year-over-year to $746,100 by 2021. Royal LePage expects the median price of a two-storey detached home and condominium to increase by 6.0% and 2.25% respectively, to $890,100 and $522,700. All indications are that the market will remain out of balance in the coming months.
For its part, the APCIQ (Association professionnelle des courtiers immobiliers du Québec) also believes that real estate activity will remain strong despite the low number of properties for sale. Prices will therefore continue to rise, a situation that will likely continue to benefit sellers. However, some properties will be put back on the market with the end of government support programs in addition to the end of mortgage payment deferrals that have been granted by the banks. On the other hand, the longer the health measures continue, the more negative impacts there will be on many subprime jobs, which will result in mortgage defaults and once again in properties being put back on the market for sale.
Corrections to be expected
Some properties are likely to undergo a correction in the coming months. Many properties were purchased at very high prices, well above their value, and when these properties are put up for sale, the price may be lower than what was paid during the overheating period. Also according to the APCIQ "the health restrictions imposed due to the Covid-19 pandemic have prompted many to want to move away from the major centers and acquire a larger property since working from home is now part of their daily lives." These homes, sometimes purchased at a premium despite their distance from services or major highways, are likely to suffer from market corrections. The same is true for cottages purchased solely for investment purposes to meet the demand of local tourism. In a context where the health situation returns to normal and international flights resume service, as is already the case for some destinations, this type of property may lose popularity and suffer corrections.
If you are hesitating to buy or sell a property, do not hesitate to talk to a trusted real estate broker. He or she will be able to advise you in the current particular market.