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Young Couples: A Housing Crash Is Your Chance to Buy Property!

Back view of hugging couple standing with real estate agent in front of house for sale
Image source: Getty Images

The low interest rate environment is an inducement to obtain a mortgage. Younger couples, however, find it daunting because of surging real estate prices. The housing market is back to new heights after the lockdowns. Prices in July 2020 have tripled from April.

The Canada Mortgage and Housing Corporation (CMHC) sticks by its prediction in May that average prices would fall between 9% and 18% from pre-pandemic levels. If it does, the federal housing agency believes the housing market will begin to recover in the first half of 2021.

If the market stays resilient and prices remain high, it would be stressful for young couples to buy a house. But a crash could be the chance to shop for a property or go house-hunting.

Will the housing market crash?

Before COVID-19, the Canadian Real Estate Association (CREA) expected the tightest spring market this year. On the other hand, CMHC’s worry stems from the impact of COVID-19, which has yet to materialize in the coming months. High employment is also a concern as borrowers might default on their mortgages.

Historically, most of the markets experience price increases even in recession, including single-family homes. In September 2020, the average price of a detached house in Toronto was $1.18 million, or 17% higher than a year ago. But the UBS Global Real Estate Bubble Index 2020 cites Toronto as the only North American city at risk of a real estate bubble.

Are banks in a panic?

The assessment of Canadian banks differs from CMHC as the six largest lenders see prices decreasing by about 3% only, on average. A marked increase in unemployment could be problematic, although banks in the country often have ample loan loss provisions.

Another group that’s not worried about a housing strain, even in winter, is RE/MAX. The leading real estate organization in Canada points to several growth factors, namely, all-time low interest rates, pent-up demand, and the use of virtual tools by real estate agents to facilitate transactions.

  • https://www.fool.ca/2020/11/02/young-couples-a-housing-crash-is-your-chance-to-buy-property/
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