3 Trends Hot Seller’s Market Has Created During Pandemic
Thursday Apr 22nd, 2021
The low inventory and high demand situation in the real market industry has created a lot of trends for home sellers, buyers, and even renters. This article discusses 3 of these rising trends - the good and the bad.
There are top three reasons why the real estate market industry has become a hot seller’s market despite the pandemic:
- Low mortgage interest rates lead to higher purchase power for buyers,
- Lifestyle changes (remote work) has encouraged suburbanization so even rural areas are included in rising listing prices
- A rediscovered appreciation of wanting homes as the pandemic forces people to find a place that can be their lockdown hub - workspace, schooling, and recreation
Renters are facing eviction when landlords decide to sell their rental property
Some renters have been handed 60-days notices to vacate the rental they have been calling home for years. This is because landlords are now wanting to get into cash in their rental properties to take advantage of the surging home listing prices.
With the pandemic, rental costs have also come up especially in the urbanized areas. Renters who are handed these eviction notices cannot find a suitable or affordable rental unit to move into either.
Currently, evictions are on hold due to the pandemic. According to the Executive Director of The Federation of Metro Tenants’ Associations, “It's totally illegal. They can't evict you because they want to sell. They can only evict you because they have actually sold the unit and the person who buys it wants to move in.” There is a legal process to follow and tenants should consult with professional legal counsel to know their current rights and the best way to approach imminent eviction.
Hopefully, this will assist tenants in finding their homes or finding the next rental unit that is suitable for them. It also helps that rent increase is minimal due to the pandemic.
Speculations of bubble burst housing market
There have been rumours of a bubble burst to happen in 2021. Different experts disagree on this conclusion, but for most home sellers or buyers, this speculation can hold them back from entering the real estate market. But as we continue a rise in listing prices this April 2021 numbers, this has not slowed down the sales activity. Home sellers and buyers are expecting listing prices to only continue, and there is also that driving fear of missing out on this market.
Most economists do agree that there should be measures to be taken to balance the market but this does not generally mean any need to burst the bubble. Once the vaccination roll out and the economy starts to come back up, there is a general expectation for the housing market to eventually slow down the rising listing prices.
Government counter-measures of a hot market
The bubble burst also has pressured the government on both provincial and federal levels to try and do some cooling off considerations for the real estate market to slow down. The government has implemented some new policies back in 2017 when the market was also hot and it resulted in 13% less of the home listing prices in the GTA.
Some implementations included Ontario introduced a 15% Foreign Buyer Tax to curb non-resident purchases and introduced Canadian Mortgage and Housing Corporation (CMHC) Stress Test for uninsured mortgage borrowers (20% down payment or higher) to qualify for a 2% higher mortgage rate than they were able to get.
The federal government has been thinking of taxing capital gains on the sale of residential properties. And also possibly increasing the CMHC stress test.
Understandably, government plans of cooling down the market have alarmed the RE/MAX real estate professionals who are against these drastic potential implementations. So they have proposed ideas to help the gradual slowing down of the hot market:
- Implement a mandatory condition to every offer, making the purchase is conditional on financing to make sure the buyer can afford the property they want to buy
- Form a watchdog institute in charge of investigating sold over asking pricing home sales
- Adding more growth in supplying housing supply that can include multi-dwelling unit developments to accommodate the high demand
A hot seller’s market is not hard to navigate if you got the right real estate professional at your side. If you are selling or buying a home, Contact JoAnn Visaretis to help you navigate the hot selling market right now.