When the COVID-19 pandemic first started in early 2020, it was the root cause of great uncertainty in Toronto and other Canadian real estate markets. We saw that uncertainty change quickly into unprecedented growth in home prices all across Canada, causing a frenzy of bidding wars due to increased demand and limited supply.

Now that it seems like we are approaching the tail end of the pandemic, one important question experts and economists have been asking is how the recovery impact will the Canadian real estate market moving forward.

The pandemic brought rise to several economic issues including a demising supply of many commonly purchased goods such as cars, contributed to droving up the cost of oil and gas, created problems with transportation for the purposes of importing goods and produce into Canada, and much more. All of this contributed to a growth in inflation the likes of which we haven’t seen in over 30 years. In January 2022 the inflation was at 5.1%. The first time since 1991 that inflation surpassed the 5% mark.

As a result, the Bank of Canada announced its first overnight lending rate hike since October of 2018, with several more expected to come over the next year or two.

While much still remains unknown, market experts predict two very different potential outcomes for the Canadian real estate market. In this article, we have compiled and explained some of the most prominent real estate trends that will likely be felt across the country during the post COVID-19 pandemic period. Read below to understand how the real estate market is changing and what you can possibly expect in the future.

Housing Market Recovery Will Not Be Consistent Throughout Canada

Market experts are suggesting the housing market recovery will be felt very differently throughout the nation. In June of 2021, the Canadian Mortgage and Housing Corporation released their Summer Housing Market Outlook report which focused on Canadian urban areas. As we read through the report we see that the rate of recovery is expected to vary throughout many of the major cities across Canada. This will likely remain true throughout 2022 especially as interest rates keep rising.

Here in Toronto and the surrounding areas we have been seeing home prices grow and the time that homes stay available on the market decreasing since the start of last summer. With the exception of condos in the downtown Toronto core, I suspect that growth will continue in and around the GTA throughout the COVID-19 recovery period in 2022 and even in 2023. I do expect we will see significantly varying rates of growth and even declines in other areas across the country. Since certain Canadian cities had an easier experience transitioning to the work-from-home model, their recovery will be less difficult than those whose transition was not as smooth.

This growth can be affected with the newly growing interest rates, since the Bank of Canada (BOC) recent overnight lending rate hike.

The CMHC report from last summer predicted that home prices in Toronto, Ottawa and Montreal will rebound before those in Edmonton, Calgary and Vancouver. The reason for the slow recovery anticipated for Edmonton and Calgary is their reliance & exposure to the energy sector. The CMHC report maintained that markets will not experience a full recovery until the end of 2022.

Despite the CMHC’s slightly pessimistic predictions, many Canadian real estate markets are already experiencing a rebound, including the Toronto housing market. In July 2021, home sales jumped back to pre-pandemic levels and home prices grew more than 14% since July of 2020 Now that Ontario has entered a more aggressive stage of the reopening and restriction reduction plan, buyers are feeling more comfortable to engage in the real estate market. Pent up demand from the first months of lockdown along with low inventory levels have driven Canadian markets to rebound and will likely keep them active well into the fall.

Home Sales Outside Of Toronto Are On The Rise

The COVID-19 pandemic has caused many existing homeowners and potential buyers to look more closely at purchasing homes outside of the GTA. Although the real estate market hit a slump in March, the last few weeks have seen a rise in real estate purchases outside of the main GTA areas. As nationwide lockdowns dominated businesses and workers were forced to work from home, many began to consider the possibility of leaving their small and expensive Toronto condos behind for a more spacious and cost efficient option outside of the city.

After all, if your morning commute is completely eradicated and you have the opportunity to work from anywhere, would you not consider exploring an option outside of Toronto that would give you more freedom, save you money, and possibly a ravine or lake? Lockdown restrictions and stay at home orders have tempted many condo residents to abandon their 300 square feet apartments and look for better options outside of the city.

The 7 municipalities with the most exponential growth have seen over a 40% increase in purchases from last year's data. While areas closer to Toronto have experienced growth over the last few years, the recent trend especially affected areas that were in the past considered to be much too far for many city slickers like Durham and Markham. The growth was also seen on a more significant scale in municipalities like King, Innisfil and Caledon. The areas that are booming and expected to continue to grow most are areas located an average of 84km outside of the Toronto core.

While areas outside of the GTA may be booming for now, it is not certain how long this trend will last. For now, it appears that suburbs farther outside of Toronto are becoming the new normal and that Canadians with work flexibility are looking to dive into this new portion of the real estate market.

Real Estate Showings During COVID-19: What Is The New Normal?

Open houses and real estate showings have changed immensely since the beginning of the pandemic. The days of attending showings as a weekend hobby and house hunting for fun took a break for a while. Until recently, many provinces had banned in-person showings, leaving buyers and sellers to depend entirely on virtual open houses for their house hunting needs, and the houses still sold.

With restrictions easing up all over the country, open houses have been given the green light a while ago as long as the new rules and precautions are followed. People attending these open houses can expect to see signs outlining the new guidelines. Open House visitors are expected to use hand washing stations upon entry and sign a visitor sheet for contact tracing. Ontario’s Stage 3 reopening plan also included open houses under its new 50 people or less public gathering policy.

Realtors and home sellers are also expected to leave all of their lights on and doors open to limit the need for excessive touching. In fact, realtors are expected to be the only ones reaching for doors and make sure they have proper PPE items: masks, gloves and hand sanitizer. They are also expected to monitor and limit the amount of individuals allowed into the home at all times.

Before attending an open house, home sellers and potential buyers are required to answer questions and sign paperwork documenting any COVID-19 symptoms or possible exposure. Sellers who agree to an open house must take the responsibility to sanitize the whole home before opening their doors to buyers. The situation can get more complicated with showing investment properties where a seller wants to show their property, but it is already occupied by another tenant. Even more precautions need to be taken in these cases.

Even though open houses have been given the green light, many buyers and sellers are still choosing to stick to virtual showings to avoid potential risk exposure. Buying a home is often one of the biggest decisions a person will need to make in their life and it can definitely be challenging to make that choice during a pandemic. While it may not be the same as an in-person showing, personalized virtual showings have made the process a little more seamless. Many realtors and sellers are offering virtual tours throughout their property, allowing buyers to take a closer look at small details, inside cabinets and through windows and doors. The buyer can actively ask questions. They can even request to be brought around to all of the spots they are curious about and would like to explore more actively. Once the buyer feels they are interested in the property, they can set up a real in-person visit to go over all of their expectations. This way sellers know the people coming into their homes are serious buyers and therefore limit their potential exposure to the virus. With this extra layer of virtual showings, buyers can also limit their exposure, and save a lot of travel time, if they are hunting through multiple homes.

Real estate agents have done a great job adjusting to those rules and restrictions, and safety precautions have been greatly respected during the summer real estate boom! While open houses are unlikely to be fully eliminated, it will be interesting to see if that “new” normal for house hunting will see much less people going from house to house looking for the perfect one as the pandemic days fade away. Virtual tours and virtual home staging have already become standard in the real estate field and realtors do not see them dying down any time soon.

While there is still a great deal of uncertainty in the world, your property purchase and mortgage refinance does not need to take a backseat. Our knowledgeable team of mortgage brokers can help you understand the current market trends while making sure you qualify for the lowest rates available on your next home purchase or mortgage refinance!

Call or text Clover Mortgage at 416-674-6222 or email us at info@clovermortgage.ca to speak with an experienced mortgage broker TODAY!