Canadians buy houses before foreigners return
Due to the impact of the pandemic, restrictions on movement have left the Canadian housing market, especially the high-end segment, absent from foreign buyers. Locals are taking advantage of the time when the market is less competitive to buy houses before the wave of investment from abroad returns.
Nearly a year ago, the Covid-19 pandemic has significantly changed the Canadian real estate market, especially the luxury housing segment. The demand for real estate search tends to shift away from the suburbs, favoring ground-floor houses with outdoor space over luxury apartments in the urban core. Demand to buy vacation homes, “second homes” also increased. Cities such as Vancouver – which is the center of international investment activities – also recorded a sharp decline in the number of transactions from foreign customers. Due to travel restrictions to prevent the epidemic, foreign investors cannot come to Canada to travel in combination with sightseeing and real estate research.
“Foreign investors are almost gone,” said Jason Soprovich, a real estate agent in West Vancouver. Although I receive a lot of requests to buy real estate, the ability of the person asking to complete the procedures to fly to Canada, quarantine, isolate and then start searching and buying a house is very slim.”
In fact, house prices in Vancouver began to “cool down” more than two years ago, when a new tax law was enacted to limit foreign buyers. Since the outbreak of Covid-19, the market has been almost completely absent of foreign investors. In this context, local people suddenly feel “breathable” because the market is less competitive than before.
Dan Scarrow, director of real estate company Macdonald Realty Vancouver, said: “Most foreign students have returned home, the number of immigrants has also dropped to a record low this year. However, the real estate market is still active thanks to the transactions of local people.” Without competing with foreigners, locals have the opportunity to negotiate better prices for high-end properties.
According to Scarrow, the selling price of apartments may decrease by 10%, but the price of ground houses, on the contrary, may increase by 10-15%. There are about 100,000 international students studying in Vancouver and many of these have returned home to avoid the epidemic, leaving empty apartments. Landlords cannot find new tenants, so they are forced to put them up for sale, creating opportunities for many people who are looking to buy a home.
Not only Vancouver, but in many major cities across Canada, tight supply and record low interest rates are prompting people in the country to close real estate transactions soon. There is an implicit consensus that once there is a vaccine, the epidemic is controlled, tourism reopens, foreign buyers will return to Canada, so many people feel the need to take advantage of this opportunity to buy real estate.
This year, areas like Whistler in British Columbia and Muskoka in the suburbs of Toronto have both seen strong demand for homes. People tend to find for themselves a safe “shelter” from the pandemic, escape from urban centers with tight land, crowded people with high risk of infection. Michael Kalles, who runs the real estate agency Harvey Kalles Real Estate, revealed: “This summer, the total value of Muskoka transactions successfully closed through our office has doubled. In many areas, the majority of buyers are Torontonians.”
Observers said that Canada is still considered a “safe paradise” in the eyes of international real estate investors. Therefore, experts predict that when the pandemic is under control, economic activities are restored, foreign investors will return to where they feel worthwhile. Canada’s real estate market in the coming year is likely to explode, selling prices will increase sharply and competition will be fiercer.
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