Vancouver has had a surprising experience with the pandemic and the real estate market recently.
Historically in Vancouver, for every one per cent rise in unemployment, there is a four per cent decrease in housing prices.
Surprisingly, during the COVID-19 pandemic, which has done a major toll on unemployment all over the world, the real estate market has been doing very well. If you were wondering what the statistics were, between February and August 2020, unemployment rates doubled while the Canadian housing market hit all-time highs.
Due to the government, homeowners who ended up jobless were able to keep their homes, due to income replacement programs, along with banks offering the option to defer your home’s mortgage payments. These two programs are extremely beneficial during COVID-19, as it gives homeowners some time to breathe, and find a new job, or a way to pay mortgages, etc.
At the same time, interest rates dropped.
When interest rates dropped, the standard cost of borrowing for buyers lowered and increased the amount of “house” they could actually qualify for. While interest rates dropped, the housing supply was relatively low, however, demand increased due to these lowered interest rates causing real estate markets to hit new highs.
Along with this several other factors will affect the upward trend.
There are many factors to look at for the real estate market currently, including COVID-19, and the severity of future waves, when our economy can recover, borders reopening to immigration, and more. However, if the government continues to aid homeowners during COVID-19, asset prices can potentially continue to rise.
Due to COVID-19, Canadians are surprisingly in better shape financially than they were before the pandemic. This is due to household spending dropping by a whopping 13 per cent, which leads to on average increasing our savings rate by 28 per cent.
However, due to countries slowly progressing in their COVID-19 steps, Canada is also dialing back some of these programs, and it will definitely lay an effect on the economy including the housing market.
Unfortunately, COVID-19 is quite frankly not over yet. And, there are some homeowners who are still unemployed and could end up having no other choice but to sell their homes once their mortgage payment deferral options end.
However, the one pro about this is the fact that the real estate market is doing very well currently, which will put you in a better position than selling six months ago.
If you would like to learn more about the Canadian real estate markets, and how it will evolve throughout the next couple of months, or if you are thinking about buying or selling your properties, please contact Matt Gul, who is a top luxury real estate agent situated in West Vancouver, who can help you with all of your needs. To contact Matt Gul please call him at 778.888.8888 or email him at matt@mattgul.com
Summarized by: Onur Gul on Instagram at @onurgulfilm