Homebuyers were coming in hot in February across many of Canada’s major markets. Toronto and Vancouver appeared to be set up for particularly strong spring seasons, with the former ramping its momentum established last year and the latter on a track to recovery to normal market activity levels after a weak 2019.
But despite the encouraging February data — published earlier this week by the Canadian Real Estate Association — all bets are now off as the coronavirus pandemic aims to put the freeze on homebuying activity through the typically busy spring months.
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“After some challenging years, the Canadian housing market found a solid footing in the first couple of months of 2020. Of course, that was before COVID-19 fears settled in,” wrote BMO economist Priscilla Thiagamoorthy.
In a research note, Thiagamoorthy wrote that home sales across the country saw their biggest monthly jump since December 2017. Sales also rose a “towering” 26.9 percent over February 2019, the largest year-over-year rise in a decade.
Unfortunately, after a series of events that were unfathomable to most only weeks ago, this high-octane market is now on pause.
“Activity is set to slow markedly—likely both sales and listings—although much lower rates should help a second-half revival,” wrote Thiagamoorthy.
She’s, of course, referring to the historic interest rate cuts initiated by the Bank of Canada at two different points earlier this month. More intervention is expected both from the central bank and federal government in the coming weeks, with the bank’s mortgage-market influencing overnight rate possibly in for a further cut down to 0.25 percent — a level unseen since the depths of the 2008-2009 Financial Crisis.
With interventions of this magnitude, many economists are predicting a significant economic rebound once the disruptive effects of the pandemic begin to wane and confidence is restored to global markets. This will be undoubtedly felt in Canada’s housing market, where demand was strong through 2020’s early months.
“The near-term outlook is extremely challenging. But we believe that, consistent with historical experience, the bounce back in activity will be very strong once social distancing measures are relaxed, and monetary and fiscal stimulus combine with a resumption in discretionary spending,” wrote Oxford Economics Managing Director Innes McFee.
“Businesses that can weather the crisis should be prepared for a strong end to 2020 and start to 2021.”
But as with seemingly all facets of life right now, there’s a good dose of uncertainty in all these recovery predictions. After all, we don’t know exactly when or how this pandemic will dissipate.
“[A]s Mark Twain said: ‘it is difficult to make predictions, particularly about the future.’ That’s no truer than today,” Thiagamoorthy wrote.