Wednesday, March 18, 2020 / by Zifan Gao
How the Coronavirus will dramatically change the Canadian Real Estate Market in the next couple of months
Since the beginning of the month, the Bank of Canada has cut the lending rate twice, bringing it down to 0.75%. This is a massive decrease in the interest rates and the biggest drop in 11 years. Since it’s cheaper to borrow we’ll see an increase in how much people are likely to spend. It also means there will be an influx of potential buyers that previously might not have been able to enter the market.
Since there was already a big gap between supply and demand, and with inventory continuing to decrease (TRREB just reported a 33.6% decrease in active listings in February), an influx of new buyers will mean a further dwindling inventory. In fact, I recently had 30 people trying to buy the same entry-level property, most of them offering to pay way more just to be able to lock it.
If you’re an investor you should be buying RIGHT NOW. GTA properties are still a high-value investment (average price increased 16.7% in February) and the low-interest rates allow for a bigger profit. Don’t wait for the interest to drop further! The market is already tight as it is and it’s only going to get tighter.
Granted, the Coronavirus might put a damper on things, but in such a tight seller’s market, it won’t be significant. It might mean that 20 people show up to see a property instead of 30, but the property will still get multiple offers and most likely sell over asking.