This question has to be one of the most asked questions during the pandemic!
And interestingly, the answers to this question couldn’t have been more diverse and contradictory.
While some believe that home prices will rebound quickly, as the lower interest rates will act as a catalyst for investment, others feel that the road to recovery will be long and bumpy.
Let’s see what key industry players are saying about the home price trajectory.
Financial Institutions – A Cautious Forecast
Data released by many financial institutions indicates that due to the market uncertainty caused by the pandemic, the housing market is headed for a slowdown.
For instance, a National Bank of Canada report predicts a significant decline in the real estate prices this year. The bank has forecasted a price decline of around 9.8% from 2020-2021.
Similarly, the Teranet–National Bank National Composite House Price Index™ also confirms the market slowdown. In June 2020, the number of repeat sales entering into the index was down 24% from last year. This is the second straight large drop from 2019.
Additionally, after correction for seasonal fluctuation, the month’s raw composite index was actually down 1.1%.
Canada Mortgage and Housing Corporation (CMHC) also seems to be in agreement.
In its special housing market outlook report, the organization forecasted that a price decline will occur, but it will take place more gradually over the next two years before it starts to recover later in 2022.
Real Estate Companies – Recovery is on the Horizon
While the financial institutions have been cautious with their predictions, the real estate organizations have a different opinion.
Many organizations have published data that shows that the real estate market has proven to be resilient and the sales are set to rebound soon.
This has primarily been attributed to the historically low interest rates.
For instance, the Toronto Regional Real Estate Board (TRREB), indicated that during the month of June, home prices across the GTA continued to witness an increase. The average selling price for all home types combined was $930,869 – this number is up 11.9% compared to June 2019.
Similarly, the Royal LePage House Price Survey and Market Survey Forecast released in July 2020 shows that the aggregate price of a home in Canada rose by 6.8% year-over-year.
What Should You Expect to Happen?
While there are clouds of uncertainty, things are becoming clearer as time goes by.
The easing of restrictions, lower interest rates, reopening of provinces, and the decline in unemployment are all factors that can positively impact the recovery process.
While no one can say for certain what’s going to happen – one thing is a given – it is critical to stay abreast of all the developments happening in the market.
Sophisticated, integrated tools, like AVMs, can help. They can provide updated information and data required for accurate assessment of properties, neighbourhoods, and regions, in real-time. Learn more today by calling 1-855-787-8439 or visiting www.purview.ca.