I'll first begin by offering up some virtual hugs, a world of patience, and a whole lot of love to you, your friends, and your families during this time.
This, being our first day of spring, I invite you to join me in honouring all new beginnings and a world of new possibilities. I believe that our natural desire to create and be connected will lead us through this time.
My job is to keep you informed on what is happening right and what to expect from real estate prospective, even though I do not have a crystal- ball however, facts speak for themselves.
Worry, fear, and panic buying aren’t an antidote to the virus. Washing our hands, doing the fist-bump, and self-isolation are.
Talking about your clean hands
For how long, do our hands stay clean? Emerging from the washroom like a surgeon, our hands are only virus-free for a minute, roughly the time it takes to touch something others have touched, like the photocopier, elevator buttons, the dreaded door handle, keyboard, or phone. The list goes on. Gosh, what about the blotter on my desk? How many death-dealing viruses live on it?
Considering Selling? List properties right away
All these variables can affect demand. If I were a buyer, I would be cautious. Don't underestimate COVID-19's negative impacts on the economy, jobs and buyers' sentiment and avoid overstretching your budget — something that tends to happen when buying in a seller's market.
My advice to sellers who are looking to cash out or downsize is to list their properties right away. Momentum is on your side and there is limited inventory, so sellers of quality homes are getting top dollar. The demand is currently high, but I wouldn't be complacent and assume that it will last. If offered a reasonable price, I would take it.
If you don't need to sell, I wouldn't and I'm not. I still think housing in B.C. is a great long-term investment.
It was just a month ago when stock markets were at an all-time high, largely due to the fear of missing out, whereas today it's the opposite: many maybe panic selling. The same could happen, but to a lesser degree, with real estate, as buying psychology is fickle.
It's important to also keep in mind that, since all financial markets are interconnected, a stock market drop should affect the housing market. For example, many new buyers turn to the bank of mom and dad to help with their down payment. However, after experiencing a drop in their investment portfolio many parents will be less inclined, or no longer able, to help their children fund a down payment.
Another important factor to consider is the potential loss of income that COVID-19 may cause. Some lenders might be hesitant to lend to applicants working in areas affected by the pandemic such as the travel or oil and gas industries. Low supply and high demand have pushed up prices — particularly in the case of condos which are selling at all-time highs.
To cushion the economic blow caused by COVID-19, central banks around the world have cut interest rates. Anyone with an existing variable mortgage, or someone looking to get one, can expect their borrowing costs to decrease. The Bank of Canada cut rates by a full percentage point since the beginning of March.
We are also seeing investors flee the stock market and park their money in investment grade bonds. A result of this flight to safety is that fixed-term mortgage rates are dropping. Lower mortgage rates increase the amount a home buyer can borrow, which pushes up prices as borrowers are able to make higher offers.
We also cannot forget about the mortgage stress test. On Feb. 18, the federal government announced that the hurdle rate of the stress test would be lowered effective April 6. In anticipation of this change, many buyers re-entered the housing market, increasing demand on a real estate market with limited inventory. However, as of last Friday, the Department of Finance announced that changes to the stress test have been put on hold.
What that mean for housing sale ratio and prices? No one knows yet however, every situation is different based on few variables so talk with your trusted real estate professional to make sense of the market for your personal situation. firstname.lastname@example.org