Some real estate market watchers and pessimistic pundits have been worrying for years about a Canadian housing crash. They said it was coming, and it was likely to happen during the next recession. Before the pandemic, economists around the world warned that the Canadian market was overheated and a major correction was imminent.
But then, the pandemic hit.
At first, many respected economists and assorted fortune tellers believed this would cause a housing crash immediately. It looked for much of April that they may be right.
Yet, it didn’t happen. In fact, housing prices continued to rise, across Canada in cities, towns and villages, though small urban condo investors weren’t so lucky.
Why didn’t the Canadian market crash?
WFH (Work from Home)
As a Realtor (and an introverted homebody), I’ve long appreciated the importance of a comfortable home with lots of space for myself and my family. But I may not be typical. For a lot of people, a home is a place to sleep and change clothes. For other people, a home is a place to entertain. Now with the pandemic, for a lot of people, how we use our homes has changed and some are realizing just how tight their space really is. When you have kids at home, trying to work from the dining room table is often impossible.
People working from home have been the ones driving at least part of the appreciation in Canadian housing. Many homeowners are looking to upgrade. That may be especially true in places like Toronto and Vancouver, where the advantages of living downtown have been taken away and the demands on your living space have increased.
Canadian housing market imbalanced
Although there are people wanting to upgrade, there are far fewer looking to sell. The last time I checked out inventory of homes for sale in Kitchener-Waterloo, it was back down to below one month’s supply. I’ve never seen such a long and persistent market imbalance between those looking to buy and those willing to sell. Naturally, that leads to steep price increases, short days on market, intense competition and expanding list price to sales price ratios.