A little over five years have gone by since the COVID-19 pandemic struck, and its effects continue to ripple through numerous sectors, real estate being a prime example.
From new modes of living to upturned housing priorities, the pandemic has definitely left its mark on real estate. Here is a brief overview of the major trends that are now driving the residential and rental markets, in both urban and rural areas.
1. Slowdown in Rural Regions’ Surge in Popularity
The massive shift toward telework initiated in 2020 allowed many employees to migrate out of the large cities without jeopardizing their careers. The demand for homes in regions like the Laurentides, Estrie, Montérégie, and even Charlevoix exploded due to an exodus of urbanites searching for more space, better access to nature, and greater work-life balance.
Despite having slowed down, this trend is now a permanent aspect of the real estate market: the popularity of secondary residences or permanent moves to the country seems firmly established.
Consequences: Prices have risen sharply in sectors that were previously affordable, and investors looking to rent to teleworkers have entered these markets.
2. Shift in Housing Needs
With the spread of telework, either full-time or following a hybrid remote work model, expectations regarding residential living spaces have changed radically. Compact downtown condos without a closed-off home office have lost their appeal. More buyers are gravitating toward single-family homes or are showing a growing preference for properties with multipurpose rooms, office nooks, patios, or backyards.
Tips for homeowners thinking of selling: Creating a dedicated workspace, investing in better soundproofing, or revamping your outdoor spaces may help boost your property’s appeal and market value.
3. Renewed Enthusiasm for Downtown Living
The condo market has dipped in major urban centres like Montréal since the pandemic. The widespread departure of professionals to suburbs and rural communities has led to a drop in demand in certain downtown neighbourhoods. This trend is nevertheless slowly reversing thanks in part to a new generation of younger buyers and to certain sectors’ partial return to in-office work.
In fact, in an effort to attract more families, Montréal’s municipal authorities are working hard to make the downtown core as lively and appealing a place to live in as possible.
Long-term outlook: Property owners can expect prices to stabilize, especially in neighbourhoods with good public transit links and nearby services.
4. The New State of the Rental Market
The pandemic’s effects have extended beyond the home buyer and seller market. The demand for rentals has also increased dramatically in many areas where teleworkers have relocated. This has not only led to a rise in rent prices, but equally to a change in supply based on the population’s new needs (see second topic in this article).
Moreover, buildings with access to communal living spaces for tenants or condo owners (gyms, shared workspaces, etc.) are highly sought after. Logical, since teleworkers spend far more time at home than before!
5. Pricing pressure: First Up, Then Down
After the pandemic boom, the market experienced a cooling period. Prices remain elevated, however, driven by a supply shortage in certain areas and persistently high construction costs. The result: buying a home may be more difficult because wages haven’t kept pace with the rise in real estate prices.
6. New Strategies for First-Time Homebuyers
Housing affordability has consequently become a major issue. And first-time homebuyers are often the hardest hit; therefore, young people wanting to purchase a property in this market must adapt.
They can, for example, start contributing to an FHSA account as soon as they land their first job. Or they might focus their search on more affordable properties in rural areas. They might likewise consider buying as a group to spread the cost. Some people get a low-priced condo to flip it and use the profits to finance the purchase of a home that actually meets their needs.
In short, there are lots of options for first-time homebuyers! In fact, RE/MAX has just launched a dedicated site for first-time buyers where they can find all sorts of information to guide them through the purchase process. Get all the info you need here : https://www.remax-quebec.com/fr/premiere-maison/acheter/
7. Interest Rates and Financial Repercussions
Interest rates shot up between 2022 and 2023 to counter inflation, affecting many households’ purchasing power. As previously mentioned, the demand for certain types of properties, and in certain regions, has declined. Nonetheless, interest rates have come down over the past few months, which is very encouraging! It’s impossible to predict, however, whether they will continue to fall.
Keep an eye on: The Bank of Canada’s future decisions will direct market trends over the short and medium term.
The pandemic has completely transformed the real estate market, and as homeowners, we must adapt. If you want to sell your property in this market or are looking for a new home that better suits your needs, don’t go it alone! Partner up with a real estate broker!