Top 4 Reasons Why People Sell Their Homes in 2021
Thursday Jan 21st, 2021Share
Most if not all business has slowed down a bit with the recent January 2021 Ontario provincial lockdown proclamation. However, the real estate industry has not come to a stop in terms of selling and buying properties but is promising more trends that coincide with why homeowners are becoming home sellers this year.
A spokesperson from the Canada Mortgage and Housing Corp. has said that “The real estate market is not out of the woods yet. We are in the middle of a second wave. There is still a lot of uncertainty and risks to housing markets ahead.”
The real estate market will continue to have an optimistic and active market in 2021 amidst the still on-going pandemic. The digital and virtual means of home buying or selling did not deter the market to continue the record-breaking sales in July 2020, which is projected to continue until late this year.
This article reinforces the top five reasons to sell your home with the key trends of the real estate market in 2021, showing where the trends influence demand for listing inventory.
Job loss, opportunities, underemployment, and transfer
The publication in Jun 2020 Ontario’s Regional Labour Markets During the COVID-19 Pandemic stated that “The COVID-19 pandemic has resulted in a significant deterioration in labour markets across all of Ontario’s major cities, with large declines in employment and corresponding increases in unemployment rates.” This was between April - May 2020 on the first wave of the pandemic lockdowns.
Employment has since been improving after June 2020 but has not been consistently going up. According to Labour Force Survey, December 2020, “By December, 1.1 million Canadian workers were affected by the COVID-19 economic shutdown—in the form of lost employment or reduced hours—compared with 5.5 million in April.”
And that “The unemployment rate was 8.6% in December, essentially unchanged from 8.5% in November.”
These labor trends can explain why there has been an increase in downsizing in terms of residential properties in the province. Job loss and underemployment can mean lesser means to pay monthly mortgages to bigger homes. So homeowners would want to sell their bigger homes and look outside of the big cities for listings with a more affordable mortgage.
Not to mention, “As the number of COVID-19 cases increased in the fall, the share of Canadians working from home trended up, reaching 28.6% in December.”(Labour Force Survey, December 2020)
Working from home has also increased demand for listings outside of the metropolis as people can take their work virtually anywhere that can have a reliable and solid internet connection.
“Many suggest demand for housing in suburbs, smaller cities and rural areas will only strengthen as people look for more space in a work-from-home boom which may not end with the pandemic,” added Don Pittis/CBC.
Commuting also has a lesser factor now due to most work being done online. So most home buyers are seeking a more work-life balance neighborhood for their homes even if it is outside major urban areas.
Death, health issues, and lifestyle changes
The pandemic has taken lives in the province of about 5,479 (Daily Epidemiologic Summary - COVID-19 in Ontario: January 15, 2020 to January 18, 2021). It has pulled attention to the need for healthcare personnel and services as a top factor in determining the location of a potential property purchase. The need for nearby amenities also moved this factor up - as the lockdowns restrict mobilization to groceries, restaurants, and recreational and entertainment venues.
Listings that are near hospitals and amenities are sought after now, with the lifestyle changes caused by lockdowns and isolation. For the aging population, they are looking into downsizing more than ever - and closer to medical services as close as they can afford the mortgage.
In real estate, the neighborhood plays a crucial part in ideal listings location. The better the neighborhood and amenities, the better chances a listing can sell quicker in the market.
Family is getting bigger or smaller
The family size was indirectly affected by the pandemic. Either there was an increase or decrease of family members depending on the situation.
Divorce rates have increased which lawyers have fondly called the “COVID bump”. Forced to live with someone with the restrictions decreasing social and emotional support outside marriages - is hard and it is taking a toll in relationships, especially those who share the same roof. Divorce rates can mean having to sell the shared home in the market and separated parties looking into new homes.
“Six percent of adult children in Ontario said they have moved back in with their parents, a figure higher than any other province...and 278K Canadian parents have moved in with their adult children as a result of COVID-19. (Source: Google Survey of 1199 Canadians)
Some young adults had to return home due to losing their main source of income or cannot afford living costs due to being underemployed. And it goes both ways for parents who had to live with their grown children since they can no longer financially afford to live independently. This usually means an increase in demand for bigger homes to accommodate the bigger family size.
New members of the family have also influenced young couples to move into bigger homes to have more room for kids - and usually looking to raise their families in the suburbs where there is lesser costs of living.
Financial advantages and gains
“Market activity across the province is estimated to remain very steady in 2021, with the potential for average sale price increases of between seven and 12 per cent in regions like London (10 per cent), Kitchener-Waterloo (seven per cent), Hamilton-Burlington (seven per cent), Niagara (12 per cent), and Kingston (10 per cent), Cornwall (10 per cent) and Thunder Bay (10 per cent). This is being attributed to high demand and low supply, coupled with shifting home-buying trends toward local liveability factors such as more space, larger yards, and closer proximity to amenities like parks,” according to RE/MAX broker network in Ontario article.
Homes bought around 80K twenty years ago can go up to 500K in value. Anyone would be happy to cash the equity in their home in their later years and downsize to have a comfortable retirement living with a bit of money in the bank.
Some homeowners also would want to sell to fix a mistake buying their fixer-uppers or bad deals. Selling homes would be easier even if there are some major renovations and deferred maintenance issues with the low inventory and high demand current market.
“Mortgage rates over the past two years have fallen, meaning the average person can essentially afford to pay around 25 percent more for a home, while house prices are up around only about 10 percent over the same period”, according to Stephen Brown, senior Canada economist at Capital Economics from an article.
Lower mortgage rates offered by mortgage brokers and banks have allowed people to be able to afford homes than
ever before. Although some financial experts do warn about being cautious about borrowing too much of what an
individual can afford. This does not deter determined first time home buyers or investors who would want to take
advantage of the market at this time.
If you are still on the fence about selling your home, do your research, gather facts, and then have an honest conversation with yourself. If your pros out list your cons then do your preparations to sell your property.
You can consult with a professional real estate agent to know more about your options and put together your listing. If you prepare now to sell in Spring 2021 or Summer 2021, you can get ahead of the real estate market frenzy and sell at an advantage. Discuss your real estate needs with JoAnn Visaretis to help put your plans in action.