A lot has happened in the past month! Watch this 2.5-minute video to hear my take about how the Coronavirus is affecting our residential real estate market.
Here is the script, in case you would rather read:
How is Coronavirus affecting the real estate market?
Hi, it’s Miia here with your monthly market update.
Well, the top news stories seem to revolve around the Coronavirus these days, so how is that affecting our hot real estate market?
This Year So Far
So far this year the statistics show that our real estate market has rebounded compared to a very slow 2019. The number of sales were up by an amazing 45.6% last month compared to February of 2019. The number of new listings was up by 7.9%, but considering that there were more sales, that meant that the market was considerably tighter, in favour of sellers, and homes were selling fast with multiple offers, and over-asking prices, just like in January.
Changes to Mortgage Stress Test = Greater Buying Power
In February the Ministry of Finance announced upcoming changes to the mortgage stress test that will help some buyers qualify for a slightly higher mortgage. These changes will take effect next month on April 6th.
Through all this hot market activity and the good news about changes to the stress test, somewhere along the way the effect of the Coronavirus on the economy began to take its effect.
Coronavirus = Lower Interest Rates = Greater Buying Power
Last week the US Federal Reserve cut its interest rate by half a percent, and then of course the Bank of Canada followed suit and then lenders did as well.
Coronavirus = Slowing the Economy
As the incidences of Coronavirus increase in the local Toronto area and around the world, fears increase accordingly.
There is less travelling, less shopping, and less spending generally. The economy has begun to feel the effects. Stock values have gone down. A recession is becoming more likely. People in certain industries are worried that they will lose their jobs.
People who were thinking of buying a home and had their down payments invested in stocks which have lost value, may no longer have enough for a down payment.
People who were thinking of buying a home, but fear losing their job, might wait until their situation is more certain.
So, what’s going to happen? Will the changes to the mortgage stress test and the reduced interest rates encourage more people who are thinking of buying to buy? Or will the buyers’ losses in their down payment funds and fears of potential job losses slow things down?
I don’t believe that anyone can really predict something like this but if I were to venture a guess, I think that for starters we will NOT see a crazy sellers’ market like we did in 2017 this Spring. The hot market that we’ve had so far this year is facing economic changes that will create a more balanced real estate market. Also, as it happens every Spring, there will be more new listings released on the market, easing SOME of the tension amongst buyers. Overall I think that the market will become a bit easier for buyers and a bit less easy for sellers over the next few months.
That’s my update for this month. Friend me on Facebook to see more of my posts.
Bye for now.