Experts are warning prospective home buyers and sellers not to be fooled by recent trends, which have seen average prices climb during the summer months.
According to a report from Lowestrates.ca, the full effects of the pandemic on Canada’s housing market will not be seen until later in the year, and the coming reality check could be a painful one.
While mortgage payment deferrals have helped offset the economic shock to households across the country, the end of these programs could lead to an influx of properties hitting the market, as some Canadians will no longer be able to afford their homes, triggering a slump despite low mortgage rates.
“It’s very hard to say right now if the blistering house price gains we’ve seen in the past few months will continue into the autumn and winter season. That’s when the market will really be tested,” Justin Thouin, CEO of LowestRates.ca, said in a news release.
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“The overall economy is continuing to struggle with elevated unemployment and businesses hesitant to spend. So far, hot housing markets like Toronto’s have shrugged this off, but there’s higher risk than normal now of that reversing,” he continued.
According to the report’s findings, Toronto saw a 17 per cent year-over-year increase in average selling prices in July, which was a result of a short-term demand shock from the housing market shutting down at the beginning of the pandemic.
Additionally, national mortgage rates could drop even further than the current 1.69% fixed rates we’re seeing. Rates are expected to remain low for years.
“Something that will continue to at least help housing prices will be ultra-low mortgage rates, which we expect will continue to stick around for at least a couple of years, if not more,” Thouin said.
“There is too much volatility right now for the Bank of Canada to raise interest rates, but this doesn’t guarantee stability in Canada’s housing market,” he added.