Just two months ago, most housing markets were roaring into an early spring market. Prices were trending strongly higher and bidding wars were commonplace in cities like Toronto, Montreal, Vancouver and Ottawa.
The COVID-19 pandemic changed all that in a few weeks' time.
Now, the market is essentially frozen. Both buyers and sellers have moved to the sidelines, and most won’t come back for weeks.
That inspires one big question: Will Canadian home prices drop due to COVID-19? And if so, by how much?
Preliminary data from the Toronto Regional Real Estate Board (TRREB) shows that in the second half of March, when the effects of the pandemic started taking hold, sales quickly fell 16%—as compared to the same period in 2019.
For perspective on this, below you’ll find industry experts opining on what we’ll see for real estate next.
On Home Sales
“Uncertainty surrounding the outbreak’s impact on the broader economy and the onset of the necessary social distancing measures resulted in the decline in sales since March 15. Sales figures for April will give us a better sense as to the trajectory of the market while all levels of government take the required action to contain the spread of COVID-19." – Michael Collins, President of TRREB (Those figures are due the first week of May.- Ed.)
“There were 3,369 sales reported during the post-COVID-period – down by 15.9% compared to the same period in March 2019.” – Toronto Real Estate Board’s March Market Watch
"Not in my time watching the Toronto real estate market have I seen sales slow right down as quickly as this” – Scott Ingram, Toronto Real Estate Agent (in an interview with CBC News)
“Many investors will find they have no alternative but to offload, so it would be entirely reasonable to expect a rise in 'distress sales.' Even pre-construction condominiums will surely take a hit as buyers under contract, now experiencing lost earnings and unemployment, may no longer qualify for financing and could be unable to close on their deals.”—Realtor, Brynn Lackie via Toronto Sun.
Where Home Prices May Be Headed
"In a matter of weeks or months, surging unemployment and the market's illiquidity will compel a growing number of tight-squeezed sellers to make price concessions.” –Robert Hogue, RBC Senior Economist (in a research note)
"We don't know where prices are going... I mean, why would you buy something now if you perceive prices are going to go down in the future, which may very well be." – Scott Ingram, Toronto Real Estate Agent (in an interview with CBC News)
"From our experience with past recessions and real estate downturns, we are not expecting significant year-over-year price changes in 2020… It is easy to mistakenly equate a handful of transactions at lower prices to a reset in the value of the nation’s housing stock. Distressed sales that occur during an economic crisis are a poor proxy for real estate value.” – Phil Soper, President and CEO, Royal LePage
“It's hard to say if we're going to see downward pressure on prices. Again, the one thing that makes this very different from even 2017…and in the financial crisis, is that…we're probably going to see sales pull back, but we're also likely to see new listings decline. And again, a lot of that is because a lot of sellers — if they don't need to sell — don't want to sell. They don't want people in their homes.” — John Pasalis, President of Realosophy in an interview with Morningstar.