When the COVID-19 pandemic hit in 2020, the real estate market saw changes that no one could have predicted. Investors aimed to sell off properties, rental prices cooled, and many people in big cities shifted their sights onto larger properties in more suburban areas. The pandemic also saw an increase in home prices as the interest rates sat at a reasonable level.
As things raged on, interest rates skyrocketed to near-unaffordable levels as the Bank of Canada tried to cool inflation rates. While the pandemic is considered “over” even with COVID-19 still around, the real estate market continues to feel the after-effects of one of the most significant global events seen in years.
An Increase in… Everything
Looking back on 2023, the real estate market saw a trend in all areas: increases. The benchmark prices of single-family homes rose by 1.6% year-over-year, along with the benchmark prices of all other properties. Condos and apartment prices and townhouse/row/multiplexes rose by 1.2%. With the interest rates at a standstill currently, the rise in prices has made it even more difficult for people to get into a property.
It wasn’t just homeowners and prospective homeowners affected by these rates. Rental units rose by a staggering 11.1% year-over-year, making it one of the most significant jumps the rental market has seen in 30 years. These changes have made it hard on buyers but even harder on renters.
The Loss of Affordability
With the increases in home prices and interest rates came questionable affordability for homebuyers. Even some sellers saw issues with passing off their current property and finding one that they could afford simply based on how much the interest rates had changed during the pandemic. Investment firms involved in buying many first-time homes also caused a wrench in the plans of many people aiming to get into their starter properties.
During the pandemic, people were also rushed to purchase homes they weren’t entirely sure about simply because of harsh competition. People were waiving inspections and making offers quickly so that they could secure a property but ended up regretting these decisions later. In the last year, people have had more time to think about what they need and want, with those things being further out of reach than they have been in the past because of high prices and interest rates.
The Virtual Takeover
Buying and selling property didn’t stop during the pandemic, and people looking for investment opportunities or simply places to call home were still heavily involved in real estate trends. Because of that, real estate professionals had to adopt new tactics to help show properties while keeping everyone involved safe from the deadly infection.
Virtual and online showings, although already on the scene, became king during that time because people could visit the properties they were interested in, without having to leave the sanctuary of their own homes. Now, the convenience of digital showings and frameworks to get sales done, such as automated loan underwriting and digital signing of offers, continues to dominate the real estate market. The days of in-person real estate aren’t over, but they are heavily changed due to the rise in digitalization.
The COVID-19 pandemic highlighted problems in many industries, and it’s safe to say that it was partly to blame for all the negative changes that took place afterwards in real estate.