Your Mortgage Guide

How Will Coronavirus Impact the Canadian Housing Market?

By Joel Balsam

Nobody expected this to happen. In a few short months, the novel Coronavirus has spread across the world, devastating world markets and crushing the Canadian economy along with it. Millions are out of work, international travel is blocked and even trips to the grocery store can be anxiety-inducing. As the dust settles and businesses cautiously reopen, how will Coronavirus impact the Canadian housing market? 

This Blog Covers:


  • How has Coronavirus impacted the housing market so far?
  • Where will the real estate market go from here?
  • Could the housing market crash?
  • Is now a great time to buy?


How has Coronavirus impacted the housing market so far?

In February, the real estate market was starting to simmer. Sales across the country were 27% higher than 2019 and prices rose 6%. Real estate was expecting a scorching hot spring – but once COVID-19 arrived and physical distancing orders were set in place, buying and selling came to a screeching halt.  

Despite real estate being deemed an essential service, home visits were rare by mid-March and sellers stopped putting their properties up for sale. In Toronto, Canada’s largest market, sales at the beginning of March were up 49% from 2019, then dropped 16% in the second half of the month. By the end of April, sales in Toronto and Montreal had plummeted nearly 70% with similar figures seen across the country.

In response to high unemployment rates, banks allowed Canadians to defer mortgages for up to six months and provinces blocked tenant evictions. To keep money flowing, the Bank of Canada slashed the key interest rate to 0.25%, allowing mortgage rates to stay at some of their lowest levels in history.

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Where will the real estate market go from here?

In the first two weeks of May, interest in the market is starting to pick up. “I did not expect any transactions or anybody to do anything at all, but it’s been busier than anticipated,” said Your Mortgage Guide CEO Vaneesh Dass.

“When COVID happened everyone jumped back in fear, but those people that were looking to buy are still ready to buy,” he added. “As long as they have jobs they’re going to be looking into the marketplace and I think they’re starting to see that there’s going to be opportunities as far as deals go.”

At the moment, prices haven’t mirrored the drop in sales – yet. In Vancouver, where sales dropped 39% compared to April 2019, prices still rose 2.5% and bidding wars were not uncommon. In Montreal, prices were down just 1.4% from March levels and Calgary – which is expected to face one of the hardest economic hits due to the pandemic’s impact on the oil industry – saw a monthly dip of just 0.35%. In the Greater Toronto Area, prices were actually up 0.1% compared to April of last year.

But history has shown that real estate prices can sometimes take a while to fall. During the devastating 2008 crisis in the United States, housing prices took years to drop, with the cheapest homes in New York not hitting their bottom until April 2012, according to real estate firm Streateasy.

Canadians may not have to wait that long. CIBC predicts Canadian housing prices to drop 5% to 10% by the end of 2020 and DRBS Morningstar, a global credit rating agency, reports that prices could drop 10% to 15% by 2022.

Dass expects deals could come as soon as late May or in June and July.

Could the housing market crash?

Economists have long predicted that Canada’s real estate market is a bubble ready to burst. Homeowners may be concerned that the long-suspected crash could finally happen due to the pandemic, decimating their investment. 

In this scenario, foreign buyers would be deterred from buying because of Canada’s struggling economy and international travel restrictions. Short term rentals and AirBnbs in major cities would go up for sale due to the downturn in tourism and owners stretched to the brink would be forced to sell once deferrals finish. Meanwhile, other homeowners would panic, causing a major sell-off unlike this country has ever seen.

The problem with this line of thinking is that it assumes all the pent-up demand over recent years will simply disappear. Cities like Toronto and Vancouver are world-class cities and there simply aren’t enough homes to meet demand.

It also assumes that the government wouldn’t step in with economic measures to stop a crash, but if COVID-19 has shown us anything it’s that the powers that be are willing to pull the trigger on economic stimulus. The Canadian government has already given billions to the unemployed, businesses, farmers, the oil sector and more. With the housing market representing 15% of Canada’s GDP (oil and gas is 9% as a comparison), the real estate market would likely be rescued as well. It is simply too big to fail. 

If sellers are still worried, Dass said the best thing to do is to simply be patient and hold onto their investment. “If you do not need to sell your property, sit tight and ride this thing out,” he said. “Continue on with your life and wait for the market conditions to turn.”

Is now a great time to buy?  

Plenty of Canadians have been left out of the market for years due to sky-high prices. Could this finally be the opportunity to get in for those lucky enough to have consistent income?

“100%. Without a doubt,” Dass said.

Homeowners haven’t been willing to put properties up for sale thus far due to the pandemic, but those who wanted to sell before COVID-19 for the usual reasons like divorce, a baby or a move will still want to sell. Because the market is expected to return slowly, there will be fewer buyers so discounts might be found.

If you’re a seller, you’re probably not going to be reducing your price in April because the virus just happened, but after it’s been sitting on the market for 60 to 90 days then you need to be willing to take a price reduction,” Dass said. 

Another reason enticing buyers to enter the market is that interest rates are some of the lowest on record. 

“They’re ridiculously low,” Dass said. “They’ll probably remain low and I don’t expect them to be rising anytime soon.”

Dass expects the market might end up being balanced. In this case, buyers would remain cautious and sellers would hold onto their properties and the market could end up in a stalemate. But even if prices remain stable, discounts will be available for those that hunt for them.

“Those deals are out there, but they’re just going to be a little bit of work to find,” Dass said.

Prospective buyers looking for a home to live in rather than an investment property should be patient, Dass said. It’s alright to shop around, but only buy something if you absolutely love it. 

“Whether it be a condo, townhouse, single-family detached or your dream house, make that complete list of everything that you’re looking for and be relentless,” he said. “If you see the property that you like, make an offer, be very aggressive with your negotiation and don’t budge on your price because odds are the seller is going to be in fear… You may get everything that you’re looking for, at a discount.”

If you’re thinking about buying a home, it’s a good idea to speak with a savvy broker to weigh your options and discuss your goals. If you don’t already have someone you can trust, sign up for a free consultation with Your Mortgage Guide CEO Vaneesh Dass.

Need Trusted Real Estate Advice in These Turbulent Markets?

Sign up for a free consultation with Your Mortgage Guide CEO, Vaneesh Dass.