At the beginning of 2020, the housing market in most parts of Canada was trending positively. Reports suggested house sales had increased by 27 percent on a year-on-year basis. However, with the Coronavirus pandemic delivering an unprecedented blow on the global economy, the residential real estate market has seen a sharp decline in activity as well.
In this article, we will be discussing the top trends that you can expect to dominate the Hamilton real estate market amid the Coronavirus crisis.
- Fewer Buyers
In the last week of March, it was reported that sales had declined by 37 per cent. The number of new listings had also reduced by 30 per cent. In Vancouver, the average number of daily sales fell by 67 per cent within a period of days.
This is primarily because there are very few active buyers in the real estate market at the moment. This is understandable given how the Coronavirus has put a sizable constraint on the economy and poses a threat to job security. With so many businesses forced to lay off employees due to lack of sales, homebuyers must reconsider their decision to invest in real estate at the moment.
2. Virtual Tours Becoming Popular
Social distancing is the need of the hour and open houses have been banned. Homebuyers no longer have the luxury of inspecting a property in person. As a result, many real estate agents are offering virtual tours of properties. These include tours involving 3D technology, live chat tools, and high-quality pictures.
Live chat tours are particularly helpful since they allow buyers to determine whether the house appears the same as it does on photos. Buyers can also ask their real estate agent to show them every part of the house, instead of just the good parts. Additionally, buyers can take down notes during the live chat tour and ask other questions they have about the property.
These initiatives aid in trust-building and reassure the client about the value of the property, especially since they cannot see it in person.
3. Difficulties Qualifying for Mortgage
More than 1.55 million people in Canada have filed for unemployment insurance during the Coronavirus crisis. With mass lockdowns in place, unemployed individuals must rely on their savings in order to make ends meet. The lack of a primary source of income and their employment status also makes it difficult for buyers to get approved for a home loan at this time.
Multiple banks in Canada have also announced mortgage deferral programs in light of the COVID-19 crisis. Under these programs, you can defer payments on your mortgage for a maximum period of 6 months. The program has been introduced to alleviate financial pressure on homeowners struggling to manage expenses at the moment.
4. Addressing the Challenges of Home Inspections
Typically, home inspection teams and appraisal teams evaluate a property in person. This has become increasingly difficult amid the Coronavirus crisis. Most realtors in the Hamilton real estate market are suggesting alternatives that involve inspecting the exteriors of a home. Inspection teams can also utilize technology that enables them to evaluate the property on their desktops.
Some companies are looking to develop technology that enables you to gather objective data for evaluating a home without having to be physically present during the process.
5. Reduced Home Prices
With few buyers on the market, we can also expect home prices to go down. As the supply and demand rule goes, currently the number of listings on the market exceeds the number of buyers. With demand shrinking, homeowners looking to put their house on sale must be willing to lower their asking prices and be open to negotiating in order to make a sale.
While you can’t expect a drastic drop in home prices, buyers can still negotiate the asking price to a certain extent and purchase a home at a lower-than-usual price.
6. Rising Mortgage Rates
People have started to take money out of their banks. As a result, the lending capacity of these institutions has reduced. Meanwhile, the cost of extending funds and the risks associated with the same has increased.
As a result, mortgage rates have increased slightly. However, interest rates continue to remain low. The current mortgage rates are also low enough to entice buyers looking to purchase a loan amid the Coronavirus crisis.
Wrapping It Up
In spite of financial insecurity, the current situation favours buyers more than sellers. Of course, you will have to bear certain risks such as purchasing the property without getting to see it in-person and making a sizable investment during an unstable economy.
However, if you have a stable job, then we suggest you leverage this opportunity and consider buying a home. You can get in touch with a realtor with experience in Hamilton real estate to learn more about the trends in the local market.