There are a lot of questions concerning how the COVID-19 virus is going to impact the Vancouver Real Estate market. Here’s what we know so far and what we can expect.
- Interest Rates Have Come Down
The Bank of Canada cutting key interest rates has led to drops in Canadian Mortgage Rates. As interest rates continue to come down purchasing power generally increases. This may result in higher real estate prices.
- Changes in the Stress Test
On April 6, 2020, changes to the benchmark rate used to determine the qualifying rate for insured mortgages (mortgages with less than a 20% down payment) will come into effect. The new benchmark calculation is more market-driven. If interest rates continue to fall in many cases buying power would increase. Some economists are predicting rate cuts later this year which could drop the median rate for the stress test even further.
- How This is Going to Effect Real Estate
The housing market was picking up before COVID-19 and has continued to gain momentum with prices continuing to rise. With improved accessibility in mortgage financing and a Spring market (which typically sees higher sales volume) right around the corner, the overall effects of COVID-19 on the housing market will most likely be minimal and short-lived.
According to Economist Helmut Pastrick concerning Vancouver Real Estate: “Though we have also had an oil price war develop recently that have hit the market quite hard. It should be temporary though; 2021 should have better economic outcomes. After a few months when the virus’s effects on the supply chain are felt less, things should pick up. Most people expect this to happen in the second half of 2020. There may even be a rebound of the market.”
With supply in listings remaining low and buyers having better access to improved mortgage rates, we don’t expect to see a big impact on housing prices.
This is a fluid situation that is continuing to change rapidly. I am always available to answer any questions or clarify the above points further. I will continue to keep you updated as more information becomes available.
604 808 3797 – Dawar Zada PREC*