Says Royal LePage: “From our experience, we are not expecting significant year-over-year price changes in 2020. The bounce-back of the national housing market, however, is projected to be strong. As Canada collectively presses pause on the economy and our lifestyles, real estate demand and activity will temporarily take a seat.
Says ReMax: “The COVID-19 outbreak will be a tough, but temporary blow to the Canadian housing market. Well, you can mull these concerns with me, or suck on the soma realtors are dishing out. How much longer can that remain the case? The greatest pool of untaxed wealth in the country is residential real estate. Already the rich face a 54% top marginal rate, and their ranks are thin. Somebody must pay for the $200 billion in excess government spending the pandemic is costing as Ottawa pumps out the cash. So if politicians and public sentiment keep workers from working for another two or three months, we need to seriously assess the risk in real estate. It’s worth remembering the American market cratered when just 8% of homeowners got into financial difficulty. Imagine what they would do to civil service defined benefit pensions.Īlmost 30% Canadians are on government benefits, including millions with no cash and all their net worth in property. As a result the city’s mayor is talking bankruptcy. In Vancouver 45% of homeowners say they won’t be able to keep making mortgage payments and a growing number believe property taxes will also go by the wayside. Yet 40% of those owners lose money every month and hang in just to secure capital gains – an illusion now. In Toronto half of all condo sales over the last decade have gone to speckers and amateur landlords. Airbnb has collapsed, which will force tens of thousands of units into the rental pool – dropping lease rates – or onto the open market, diluting prices. Over 600,000 households – representing 12% of all bank mortgages – have asked for payment deferrals. Legions of people bought houses with 20-times leverage, and even with rock-bottom mortgage rates they are now hurting. We owe more than the Yanks did when their real estate collapsed.
Household debt is off the charts, at an historic high. So much for those Wexit guys.Īs for real estate, it’s hard to overstate the negatives – and this sector is a bigger hunk of the economy than energy. The situation is the most dire in 30 years, and for Canada it’s a blow. Demand has been destroyed by the impact of the virus as governments in many countries turn off their economies. World crude prices were below $20 US again Thursday.
There are two things we need to fret over. In six months investors will be happy they sold nothing in the storm.īut Canada is not America. The expectation of this is why stock markets have reclaimed a lot of the ground they shed when the virus arrived. Once virus restrictions are eased in May the snap-back in GDP will be impressive, even if the jobless rate stays in double-digits until next year. The good news is that America’s a highly-diversified behemoth with deep pockets and a presidential election in seven months. It will takes years for this to recover, which is a big deal since 70% of the US economy is based on consumer spending. The jobless rate went from 3% to 17% in a flash. In four weeks 22 million Americans became unemployed, wiping away 10 years of growth. Job losses and economic decline are without precedent. History will judge this pandemic against all those in humanity’s past. Since this is not a virus blog, we won’t talk about the flattening curve, the under-utilized hospital emergency rooms or the way a bug ate our civil liberties. Wall-to-wall media virus porn and politicians making the most of a crisis did a bang-up job of scaring the poop out of folks. So says this week’s Leger poll.Ĭonclusion: at least half the country is cool with sweatpants, Netflix and government pogey. A quarter would return to their jobs only when there’s no pressure on the health care system. Another 20% want to stay home until there’s a vaccine. In the midst of what can only be described as economic rubble, 30% of Canadians say they shouldn’t return to work until the virus is gone.
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