The Canadian real estate market has been through more than a few major changes over the last year or so and there is evidence building that suggest another change is coming.
As more and more people are COVID-19 vaccinated and life returns to pre-pandemic levels there is a good chance that a shift in housing preferences is just around the corner.
1 – Return to Work & Urban Centres
With life returning to normal corporate Canada will be requiring a large portion of their workforce, that are currently working from home, to return to the office. This factor alone will mean that people will again be seeking accommodations closer to their work. As the vast majority of offices are located in urban core areas the demand for accommodations will heat up in those areas.
Factoring in the severe shortage of affordable single-family homes in most urban core centers, people will have no choice but to turn to condominiums and townhouses. This demand could result in an overheated condo market that will see a presale condominium sales boom and prices on the rise.
2 – An Increase in Immigration
Last October the federal government announced it was increasing its target of permanent resident admissions in 2021 to 401,000. That is an increase of 50,000 from its previous plans for 2021. At the moment, due to the pandemic, Canada has fallen far short of that goal and currently sits around the 200,000 mark. That will soon change as life returns to normal and the borders open up. Where are people going to go? They will follow the jobs and come back to urban cores and this will drive increased housing demands in those areas. With single family houses currently out of reach for most people condos are the only affordable option.
3 – The Rush to Secure Historically Low Interest Rates
One of the most significant drivers for the real estate market in the last 18 months has been historically low interest rates. The Bank of Canada recently stated “We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 % inflation target is substantially achieved”. In the Banks July projection, this happens sometime in the second half of 2022. As the single-family home is out of reach for many people in the Greater Victoria area those buyers who want to take advantage of low rates will be shifting to the condo market where the prices are lower and they can qualify for home ownership.
4 – New Inventory/ Presales Shortage
There is currently a shortage of new build condominiums in urban cores. This is true in Vancouver, Toronto and in Victoria as well. As life returns to normal, people get back to work, immigration picks up, the mind set of Canadians becomes more positive and the investors come back to the market this shortage of inventory may become acute. Any developer who is planning to bring new inventory to market in the next little while may have a very hot market for his product. As always timing is everything and the timing may be perfect for sales success