Despite the negative impact of the Coronavirus pandemic on the worldwide economy, real estate in Canada has continued to rise beyond expectations.
With the growing misleading claims among analysts, there’s no justification for the question:
Will the Canada housing market crash?
As a matter of fact, the Bank of Canada is currently monitoring the housing bubble to ensure the Canadian housing market’s smooth running.
In what follows, you will understand how the current Canadian Real Estate Market and the factors that dismissed the claims of crashing.
Understanding The Current Canadian Housing Market
COVID-19 has caused a significant slowdown in Canada’s real estate sector, as it is in other parts of the world.
But instead of resulting in a dramatic reduction in home prices, the pandemic has made a flow in demand for more houses in Canada.
Low-interest rates and a shift in buyer preferences are what currently fuelled the red-hot Canadian housing market.
Once the world has stabilized from the current pandemic, housing prices may be returning to normal as people will have to work hard to afford homes again, increasing the demand for housing.
Canada Housing Market Crash and Interest Rates
The primary reason behind the current debate lies in historic low mortgage interest rates. It’s hard to find a better time to buy a home.
Right now, Canada’s central bank mortgage rate is as low as 0.25%.
It is important to remember that the interest rates were nearly 13% when the housing market collapsed in 1990.
When you compare these statistics, it is evident that Canada’s current housing marketing is far close to a collapse.
So with falling interest rates and people spending a greater time at home, the demand for housing in Canada increases.
A rate hike could be the straw that breaks the camel’s back – pushing the housing bubble to pop. This will be rocky for consumers.
However, debt repayment will also determine the fate of Canada’s housing market after the pandemic.
Why Crash Isn’t Likely?
Canada’s economy has a long history of responding aggressively to pandemic outbreaks.
The Canadian real estate market is expected to recover speedily once vaccines roll out.
Economic conditions vary across different countries. Different cities and regions recover at different rates.
This means that even while the national economy recovers, some places will see a slowdown in business or a blip in the upward growth trajectory.
Mortgage interest rates have dropped over the past two years in Canada.
Doing so has allowed the average person to afford a 25% down payment for their money.
Canada’s real estate market will bounce back due to cost.
This is because, as more people are looking for their living homes in the country, the market will experience an upward trend.
There is no likelihood of a crash!
The Canadian housing market is still hot!
Contrary to what many people are thinking, the Canadian housing market is not in a bubble that is going to crash any time soon.
In a world hit by pandemics, Canada remains the most attractive destination for immigrants, with its growing economy and attractive housing market.
Canada’s central bank is committed to keeping the mortgage interest rates low until 2023.
The current economic downturn, combined with the low interest, has provided a great opportunity for many people to invest in Canada’s real estate market.
But with the COVID-19 vaccine, it is expected that everything should come back to normal soon.