Recent data may offer insight on what’s in store for Canadian real estate and local housing markets
In February, home prices in the Halifax housing market were gaining momentum with an increase of 0.8 per cent. The economy was showing signs of steady growth, foreign immigration was fueling the population, coupled with record job creation in the city.
These factors were boosting real estate activity while a strong demand for homes, specifically purpose-built rental and single-family detached homes, was evident.
According to the Canadian Real Estate Association, the average price of Halifax homes sold in the month of February was $328,821. This is up 9.2 per cent from the previous year. In the same region, the number of homes sold was 417. The Halifax real estate market was indeed off to a strong start in 2020.
Yet, March was a challenging month for many industries. We likely won’t know the true impacts of the coronavirus on the real estate market in Halifax for some time, due to the lag effect of the market. The impact will depend on the duration of social distancing measures and effects on job security. However, there are factors at play that may give us an idea of how the industry will fare during this time.
Compared to other large cities in the Canadian housing market, Halifax has attracted many homebuyers because of the affordable housing options available. First-time buyers, especially young people, are drawn to this market. Single-detached homes are the main type of property purchased, while retirees opt for condominiums. Popular areas for purchasing homes in Halifax are North End Halifax, Clayton Park, Bedford and parts of Dartmouth.
In 2019 and earlier this year, Halifax was mainly a sellers’ market as a result of low inventory. However, this has the potential to change since a lot of buyers may take a wait-and-see approach during this uncertain time. As a result, there may be a potential slowdown of real estate activity due to the pandemic.
Although, as far as we can see, home prices remain stable with people continuing to engage in the Halifax real estate market.
Low interest rates
The mortgage stress test has made it difficult for some homebuyers to enter the market because they are unable to qualify for a mortgage. However, the Bank of Canada lowered the benchmark interest rate significantly since the coronavirus pandemic occurred. The good news is if you have cash on hand for a down payment, you can take advantage of lower mortgage rates.
The benchmark rate was lowered to 0.25 per cent, the lowest rate on record.
This means that if you have job security and a down payment ready, this could be an opportune time to purchase a home in Halifax.
Since you may be able to qualify for a larger mortgage, buyers may now find themselves with the financial power to purchase a home they couldn’t afford previously.
Depending on the buyer’s personal situation, it could be the right time to purchase a home. However, buyers should ensure that they don’t overextend themselves financially if their short-term job security is in question. For those who are concerned, playing it safe and waiting for the pandemic to be over is also a viable option.
Adapting real estate business
In Halifax, like in other Canadian housing markets and around the world, real estate agents will need to adapt their business to face the challenges associated with social distancing and coronavirus.
Homebuyers can virtually tour homes instead of visiting in person, to make their decision whether to purchase the property. Advancements in technology give homebuyers a high-quality virtual tour to discover the layout of the home and make them feel like they are there in-person. Panoramic images and floor plans are also great tools to help homebuyers discover what a home will look like without going to an open house.
To avoid meeting in person for documentation signing, agents are able to use electronic signatures to continue the home-buying process without disruption.
For now, the Halifax market continues to see activity during the coronavirus pandemic. People seem to be attracted to Halifax’s affordability and opportunities for employment. Real estate agents are taking precautions when helping their clients to either find their perfect home or sell their home. Prices remain stable and low interest rates may encourage more people to make a home purchase in this city.