Some effects of the pandemic on Canadian housing markets expected to be temporary, some less so
With the pandemic now approaching a full year, there are two trends that have taken shape which have had a significant impact on the country, particularly larger cities.
A report from BMO indicates there has been a mass exodus of residents of big cities, as urban population growth has slowed considerably during the last few months.
According to the findings, from July 2019 to July 2020, 80,000 people migrated out of Toronto, Montreal, and Vancouver to other areas of their respective provinces.
“Combined with a steep falloff in international non-permanent residents, this slowed combined population growth in these centres by 0.7 percentage points over the course of 2020,” Robert Kavcic, senior economist with BMO Capital Markets, said in a news release.
“The pandemic has prodded some temporary movement out of the major cities, while it also likely pulled forward some movement that was eventually going to take place anyway in the years ahead. We don’t know how much of the shift is permanent, and how much is temporary, but it’s likely a bit of both," he continued.
Additionally, the pandemic has had an immense impact on the Canadian housing market through a combination of temporary, semi-permanent, and permanent factors.
With travel restrictions in place for much of the last 12 months, as well as a universal shift towards working from home, the demand for recreational property and real estate typically outside normal commuting distance has skyrocketed.
As restrictions ease, and people return to the office, the demand for these properties is expected to return to normal levels.
“However, the ability to work remotely has made the economics of such ownership more appealing. Ownership of a second property is no longer just a Friday evening-to-Sunday afternoon proposition. As a result, some of the increase in prices will likely stick," Kavcic said.
Further, there has been a shift in strength from big urban markets to perimeter markets, and prices for single-detached homes are on the rise, while condo prices are declining.
Moreover, while prices for condos are projected to even out as the impact of the pandemic abates, that's not necessarily the expectation for semi-detached homes.
"The extent that the pandemic has pulled forward some of the inevitable shift into this segment of the housing market suggests that a good portion of the gains will stick, major changes in interest rates aside,” Kavcic said.
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