May-June Real Estate Pivots in the Age of Covid-19 MLS® Stats during Covid-19
Anonymous
Tuesday, June 9, 2020
COVID-19, coronavirus, pandemic? That is all we hear and how long before we forget them? It could be awhile. In the meantime, it is changing the way we live, work and play. The weather is getting warmer and COVID-19 restrictions are loosening in many parts of the country. COVID-19 has impacted all sectors of the economy, including real estate. While the market is still acting up, competition for housing is still high, CMHC is changing its underwriting policies for insured mortgages.
While the market in Ottawa still shows positive signs, there is still plenty of work to be done before we can return to a sense of normalcy. What happened in May for residential sales?
In May, the Ottawa Real Estate Board sold 44% less residential properties compared to May 2019, recording 1,345 properties sold. May’s sales included 1,066 in the residential-property class, down 43 percent from a year ago, and 279 in the condominium-property category, a decrease of 49 percent from May 2019. The five-year average for May unit sales is 2,048.
Please note: The x-axis is based on weeks. Just like graphs that are based on months, and thereby numbered 1 to 12, these graphs are based on weeks numbered 1 to 52. We started our graphs on week six which is a month before the Ontario State of Emergency Order.
“Just as May’s temperatures had us questioning what season we were in, our real estate market also underwent a seasonal switch, so to speak,” notes Ottawa Real Estate Board President Deborah Burgoyne. “This spring market is performing more like a fall market with the number of new listings and resales on par with what typically occurs in late October and November.”
We expect that as the economy continues to roll out and consumer confidence increases, our real estate market will follow suit, the pent-up demand pre-Covid still exists. Our spring numbers are typical of our fall figures, with cautious optimism, we can hope that there is a ‘flip flop’ and our fall numbers are closer to spring figures.”
Despite these figures, May’s average sale price for a condominium-class property increase of 15.5 percent from this time last year while the average sale price of a residential-class property increase of 11.2 percent from a year ago. With a year to date average sale prices at $546,177 for residential and $348,458 for condominiums, these values represent a 13.8 percent and 17.8 percent increase over 2019, respectively.*
“Although the Canadian Mortgage and Housing Corporation’s (CMHC) forecast for Canada’s housing prices may seem pretty bleak, their broad-based analysis for the country as a whole does not accurately reflect what is transpiring in our local market as evidenced by the steady increases in average home prices in Ottawa - even during the crux of a pandemic and global economic recession.”
“Unquestionably, the fact that we are still in the midst of a seller's market is a contributing factor. Nevertheless, with our region’s stable employment and a continuous influx of newcomers, homeowners can take comfort in the knowledge that owning a property in Ottawa and its surrounding areas is a solid investment for yourselves and future generations,” our President Burgoyne assures.
Effective July 01, 2020, Canada Mortgage Housing Corporation will change its policies for an insured mortgage in order to protect future home buyers and reduce risk.
The following changes will apply for new applications for homeowner transactional and portfolio mortgage insurance:
- Limiting the Gross/Total Debt Servicing (GDS/TDS) ratios to our standard requirements of 35/42;
- Establish a minimum credit score of 680 for at least one borrower; and
- Non-traditional sources of down payment that increase indebtedness will no longer be treated as equity for insurance purposes.
To further manage the risk to our insurance business, and ultimately taxpayers, during this uncertain time, we have also suspended refinancing for multi-unit mortgage insurance except when the funds are used for repairs or reinvestment in housing. Consultations have begun on the repositioning of our multi-unit mortgage insurance products.
“COVID-19 has exposed long-standing vulnerabilities in our financial markets, and we must act now to protect the economic futures of Canadians,” said Evan Siddall, CMHC’s President and CEO. “These actions will protect home buyers, reduce government and taxpayer risk and support the stability of housing markets while curtailing excessive demand and unsustainable house price growth.”
The uncertainty is particularly challenging across-the-board, utilizing a REALTORS®’s experience, insight, and extensive professional network is particularly advantageous during this time. We will ensure to guide you and assist you with the sale and/or the purchase of a new home. We help you maneuver through this and help you prepare stronger to meet your hard criteria and identify possible alternative options to meet your goals.
For homeowners who are at a crossroad in their relationship, in process of separating, dealing with tenant rights, estate sales how to deal with it, evictions and rent, for transferees, moving from one city to another, for sellers and/or buyers moving in the midst of Covid-19 and more. Lucie Martel at Martels Real Estate is posting on a regular basis all kinds of useful articles on their website blog, their Facebook page and their social media to keep you abreast of this market. Join us on our blog and social media. Or if you prefer to call us directly, we will be more than happy to assist you. There are lots of viable options.
We want to take this opportunity to invite you to also refer to various articles, our real estate industry including our Canadian Association put together on Realtor.ca site Covid-19 hub to help you to adapt to the ever-changing situation: https://www.realtor.ca/blog/category/3195/COVID-19/page/1
People still need homes, and consumers are back out there looking for homes.
We would like to hear from you! If you have any questions, please do not hesitate to contact us. We are always looking forward to hearing from you! We will do our best to reply to you within 24 hours !