It’s hard to believe that the COVID-19 pandemic has been upon us for 6 months. It seems like just yesterday that we were all leading normal, busy, and maybe sometimes chaotic lives, mask-free, but this pandemic is like nothing we have ever experienced before or likely anything we will experience again.
However, despite all of this, the real estate market has continued to roar. It’s actually remarkable with the nay-sayers sitting on the sidelines waiting for it to crash? But will it? Lately, we’ve seen houses with multiple offers selling for 60-70 sometimes even $80,000 over asking?
Just last month, a house in the Ottawa area sold for $250,000 over asking? In Ottawa! Insane, right?
But why is this happening?
Well, there’s many reasons.
First, we’re seeing extremely low inventory on the market. For those of you who skipped Intro to Economics, or maybe you slept through it, when there’s low supply and strong demand, that tends to equal the 2020 real estate market. Let’s be honest, many of us were sitting at home, and you can only watch so much Netflix, so what we do? Clearly go on the realtor.ca app. Further, a lot of sellers were nervous about selling their houses so we only saw listings dribble out. And as more sellers saw those houses sell for their asking price, we saw more listings trickle out.
LOW INTEREST RATES
Interest rates are at an all-time historic low. I feel like we’ve been saying this since 2008, but it’s the truth. We’re seeing investors getting anywhere between 2-2.5%, however, some are even less than that. I’m serious.
Money is cheap and people are willing to spend it so low interest rates are helping the economy and the real estate market to continue to thrive.
MORE DISPOSABLE INCOME
Despite the uncertainty with global economy, Canadian actually have access to more disposable income now than they ever had. In fact, some people are earning more NOW than they have in the past. Why, you might ask? Well, many of our bills had the ability to be deferred for up to 6 months as a result of COVID-19.
ARE WE ON THE VERGE OF A MARKET COLLAPSE?
However, all of this begs the question, are we on the verge of a market collapse?
Well, it depends.
Don’t you just love that answer?
The truth really depends on what happens in October. You see, many of the banks, car companies, and other financial institutions gave many Canadians for up to 6 months. That being said, starting in October many Canadians will have to start paying for things again, if they weren’t already. So, the question becomes, how will they fair? Will they start to hoard money or will they continue to spend and further stimulate the economy.
Regardless of what happens with the real estate market, many of you remember the correction in 2008/2009, some of you may not, however, it was not a significant downturn.
But remember, real estate is not a get rich quick scheme, however, regardless of whether the market chooses to correct, you’re in it for the long haul and it’s not timing the market, it’s time IN the market. Together, we will weather the storm together. However, know this, you are much further ahead by investing in real estate than by not.