Trends, Myths and Predictions for 2021
After being locked down for nearly 8 weeks beginning in March of 2020, our market came roaring back in May finishing out the year as hot as it’s ever been.
During the early days of the first lockdown, predictions of a market crash filled the headlines with even optimistic experts”predicting just a 2-5% price increase.
Rather than make bold predictions about where prices are going, or what sectors of the market you should invest in; we prefer to focus on trends that are currently driving the market as well as dispelling two common myths.
Trend #1 Low Inventory
2021 will continue to be a seller’s market due to extremely low inventory, meaning the number of homes for sale does not meet the demand. We predict this trend to continue as many empty nesters are deciding to hold onto the family home and put off downsizing.
Myth #1 - The Market is Going To Crash
The concern regarding the impact of potential mortgage defaults has eased significantly. According to CMHC, as of September 30, 2020, only 5% of mortgages have been deferred, down from 8% in August.
Even if prolonged lockdown measures lead to an increase in mortgage defaults, pent-up demand has been so high that such a boost would be insufficient to cool the market, as these properties would be absorbed immediately.
Trend #2 - Record Low Interest Rates
With the Canadian government indicating that record low interest rates will continue, we do not foresee a slow-down in buyer activity this year and possibly well into 2022. Keep an eye on rates as a key market indicator.
Myth #2 - The Condo Market is Dead
We did see a softening of demand for downtown condos as there was a clear shift towards larger, single family properties in 2019. However, as a vaccine becomes more widely available, we expect the condo market both downtown and here on the West Island to heat up toward the end of 2021.
Trend #3 - Immigration & International Students
Royal LePage research shows that newcomers to Canada typically rent for three years before purchasing. The federal government’s plan to accept 1.2 million immigrants over the next three years will support both the resale and rental markets.
With the return of international students and newly arrived immigrants in the second half of 2021, demand for condos should increase to pre-2020 levels.
Trend # Four : Increased Buyer Activity in the Suburbs
The pandemic accelerated relocation patterns already underway. It forced families to repurpose their homes into offices, gyms, and classrooms, pushing many to want to upgrade or renovate to gain more functional space.
Covid has also accelerated the move toward remote work and nudged millennials to seek out single family homes as they start having children.
Trend # 5 Off-Island Homes and Cottages are HOT
Baby-boomers began moving to suburban and rural areas and investing in cottages in the middle of the last decade and this trend has continued to accelerate here in Quebec.
A recent survey published in the Gazette, found that 30% of households intended to buy a property within the next five years, and 15% of those would-be buyers had their eye on a vacation property.
Many buyers who can now work remotely are able to afford a larger home, with more land, compared to what they can find on-island.
Trend # 6- The Luxury Market & Major Renovations
Residential investment in new construction and renovations rose by 18% in Q3. We’ve seen a major uptick in the luxury market with homes in the $1.5M to $4M range selling in record time compared to years past.
Older homes in prime locations are being torn down to make way for new, larger homes with the amenities and layouts today’s families are after. Canadians are also investing in renovations, extensions, pools and various upgrades to make their homes more modern and functional.
Expect to see more of the same feverish buyer activity here in our local market. In need of some advice on what you should be doing? Having someone in your corner with access to the latest research, and who understands the latest trends will help you make more informed decisions.
All you have to do is ask! The BW Group is here to help you.
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