To facilitate economic recovery, The Bank of Canada maintained its target for the overnight rate at the effective lower bound of 0.25%.
The quantitative easing (QE) program will also continue to be in place, with large-scale asset purchases of at least $5 billion per week of Government of Canada bonds.
The Bank highlighted that household spending rebounded sharply during summer, there was a large but uneven rebound in employment, and exports were recovering. However, while the data is reassuring, the Bank expects the recuperation phase to be slow due to economic uncertainty.
While Canadian interest rates continue to remain low, what is happening on the real estate front?
Taking a quick look at the data from July 2020 can show you that the pandemic is continuing to impact the Canadian real estate market.
While there was a rise in the Teranet–National Bank National Composite House Price Index™, in July, it was minimal. In fact, the 0.3% increase from June 2020 was the smallest July rise in 15 years.
Even though there are signs of a partial revival of activity, the number of repeat sales entering into the July indexes was down almost 20% from a year earlier.
Additionally, when it comes to real estate prices, the rebound is expected to vary from one region to another. For instance, according to CMHC, the average home prices in Toronto, Montreal, and Ottawa are expected to rebound sooner than other regions such as Vancouver, Edmonton, and Calgary.
Recovery seems to be happening gradually. In addition to the modest gain in the House Price Index, an increase has also been seen in the sales registrations.
Our Monthly Market Insights Report, published in August 2020, shows that sales registration volumes for residential properties, in Ontario, are exhibiting a positive upward trend. There has been an increase from 24,000 in June 2020 to 26,000 in July 2020. <link to:
This is primarily because there has been pent-up demand. As the activity was lower than usual during late spring and early summer months, many buyers and sellers are now looking to explore their options.
When it comes to buying patterns across Canada, we can also see a shift in preferences.
For instance, as work-from-home policies are increasingly being put into place by companies across different sectors in Canada, many buyers are finding value in exploring suburbs. Especially properties that offer more space and have features such as pools or backyards.
The survey conducted by Leger, on behalf of RE/MAX Canada, seems to validate this observation as well. 32% of Canadians don’t want to live in large urban centres and 44% of Canadians would like a home with more space for personal amenities.
As we move into fall, we may see more activity than usual during these months as COVID-19 has affected the typical real estate cycle. The easing of restrictions, reopening of provinces, all-time low mortgage rates, and higher employment are all factors that can positively contribute to this trend.
As the real estate market is changing fast, it is important to stay updated when it comes to all the developments in the market.
In times like these, integrated tools, like those available on GeoWarehouse, can provide updated information on property trends, neighbourhood analysis, and property values in real-time.
Read the full Bank of Canada rate announcement here: https://www.bankofcanada.ca/2020/09/fad-press-release-2020-09-09/
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