Insights and Predictions on the Real Estate Market
Earlier this week, I had the opportunity to take part in a call with colleagues from across the country and Royal Lepage CEO, Phil Soper. I have always had a lot of respect for Phil and enjoyed listening to his insights and predictions on the real estate market.
We reviewed the factors at play that give us confidence that the real estate market will lead us out of the recession. These factors include the economic stimulus plans that the government has quickly put in place, interest rates being at an all-time low, population growth, an ongoing housing shortage and the fact that prior to COVID19, 2020 started in a good position with strong market demand and the lowest unemployment rates in our adult lives.
There is no question that this is the biggest correction that we have seen since 2008 but 2008/2009 was an economic crisis where the changes we are seeing now are fuelled by a health crisis. Even after the 2008/2009 market correction, prices recovered quickly in approximately nine months. RBC has forecasted that they expect volume to be down by 30% this year. They have also predicted that the market will restart in early Summer. I agree.
We also talked about the U.S. versus Canada. The financial system supporting housing in the U.S. is not as stable as Canada. Because Americans can write off their mortgage payments, it encourages more debt which ultimately leads to significantly higher default rates. Banks in Canada are forgiving mortgage payments at this time which will keep the number of “distressed” sales to a minimum.
We look forward to the market returning to “normal” but in the meantime, we are here and working through this time which is truly “history in the making”. We do see opportunities in the current market and we are happy to discuss these with you. Please call or email if you have any questions.
Wishing you continued good health,