As Edmonton Realtors® prepare for the busiest time of year for home buying and selling, we’re getting a lot of questions from clients who are concerned about how the pandemic will affect the real estate market this year.
First time home buyers, or anyone else who was planning to buy a house in 2020, are wondering: Will Edmonton house prices drop this year? Will mortgage rates drop? What impact will the coronavirus have on the Edmonton real estate market? Are people still buying and selling houses? The short answer to that last question is YES! But it certainly looks a lot different than it did a year ago or even a couple months ago.
While the spring 2020 housing market is not without its challenges this year, experts predict relative resilience even during these uncertain times. My recent post outlines in detail what you need to know about buying or selling a home during the COVID-19 pandemic but here I will focus on the current expert predictions for the Edmonton real estate market this year.
Hot real estate market stalled (but not out of the race completely)
The onset of the pandemic brought an abrupt halt to what was shaping up to be a strong season across the country. According to the Canadian Real Estate Association (CREA), national housing sales activity showed a year-over-year gain of close to 30% in February of 2020. If you’re like me, February probably feels like a lifetime ago!
As the threat of the global pandemic spread across Canada, the month of March saw massive changes in the daily lives of Canadians — from temporary layoffs among the nonessential workforce to social distancing measures and temporary closures of many stores, restaurants, and services. Not surprisingly, the dramatic changes and uncertainty had an effect on the market, with Canadian home sales dropping 14.3% in March 2020 compared to February. The month-over-month sales rate in Edmonton was down 13.2% in March.
Over the coming weeks, we will start to see data for Edmonton home listings and sales during the month of April, but preliminary numbers from the first week of April suggest that both sales and new listings were only about half of what would be normal for that time of year.
“Of course, with the outbreak of a global pandemic and a hard hit to Alberta’s oil and gas sector, this type of market slowing is not surprising. There have been less sales of single family homes, condos and duplexes than in March of last year. Single family home pricing decreased 4.64%, duplexes are down 6.28%, and condos are up 2.50% year-over-year,” says REALTORS® Association of Edmonton Chair Jennifer Lucas.
Economic experts predict a rebound could start as earlier as summer
According to RBC Economics, the pandemic will cause a “temporary shock” to the housing market and activity will resume as the nation slowly and safely lifts containment measures. Timing and pace of the recovery is not known and experts suggest it will come in stages, “taking buyers up to a year to regroup and rebuild confidence amid high unemployment.”
Key predictions:
- Home resales to dive by nearly 30% this year in Canada
- Home resales to surge more than 40% to 491,000 units in 2021
- Canada’s composite benchmark prices predicted to fall briefly over the second half of 2020 by an average of 2.9% year over year. The surge in activity expected in 2021 will tilt the scale back in favour of sellers and swing the price dynamics around.
- Oil price plunge puts Prairie markets at greater risk
Fluctuating mortgage rates
Interestingly, the recent reductions in the prime rate have not extended to deep drops in mortgage rates. In fact, some fixed rates have increased as banks become more cautious about lending and liquidity.
Variable mortgage rates are now generally lower than fixed rates, so many mortgage brokers are recommending that borrowers consider variable rates over fixed, but suggest to keep a close eye on the market and be ready to lock into a fixed rate should things change quickly.
The bottom line: Should you buy/sell now?
There are a lot of different factors to consider before stepping into (or out of) the real estate market this year. Your personal circumstances will largely dictate your home buying or selling decisions. Income stability, personal savings, housing affordability trends, and interest rate trends are important criteria to assess before making any decision.
Your Realtor® is your best ally and resource to help navigate the current real estate market. With your specific circumstances and needs in mind, he or she can plot the best course of action to take during these difficult times.
Much of what the future has in store is still currently unknown. But it’s important to remember that you are not alone! We face the uncertainty together and prove on a daily basis to be resilient and innovative in the ways that we are adapting to the challenges that come our way.
If you have questions about the market or need advice on buying or selling a home right now, I’m here for you! Connect online or give me a call/text at 780.238.7384