Canadians: Is Now A Wonderful Time To Buy A Home?

It has been a wild whirlwind couple of weeks across the entire globe. Unless you've been living on the moon since last month, you've undoubtedly heard about COVID-19 and its impact on society. Across the world, countries are gearing up for social distancing, isolation, and a potentially weak economic outlook. Our own Toronto Stock Exchange tumbled from 17,843 on February 21, 2020 (doesn't that feel like a long time ago!) down to 13,716 at the time of this writing.

As a real estate agent, people often ask me, "is now a good time to buy?" In uncertain times, buyers might be hesitant to sign on the dotted line for what will arguably be the biggest purchase of their life. However, to answer the question: yes, it is. Here are three reasons you should still consider buying a home in beautiful Vancouver, even if the effects of COVID-19 might seem spooky.

Strong, Swift Interest Rate Support For The Markets

The Bank of Canada has done two rate cuts. Mortgage rates now sit at 0.75% which, given the fact that the economic outlook for Vancouver was quite rosy at the beginning of the year. Economists across the board were noting how business investments within this region were substantial. These investments would create quality jobs and bring prosperity to BC.

Typically, when economies are doing well, interest rates go up, which makes housing more expensive. With COVID-19, you have the exact opposite scenario happening. Assuming everything doesn't grind to a halt for months and months on end, you have a unique once-in-a-lifetime situation where the massive interest rate reductions don't match the robustness of the economy. In short, these low rates mean that the cost of a mortgage right now is far less than it would otherwise be!

There's No Evidence That COVID-19 Has Slowed Housing Yet

While we don't have official numbers on how COVID-19 is impacting housing yet, we also have no evidence to suggest that it is forcing prices to go down or that it is changing the number of buyers. Home prices are still up 8.9% as a yearly change and have gone up significantly over the past month. Additionally, when compared year over year, homes are sitting on the market for far fewer days than last year.

With property prices rising and interest rates being so low, this could be a fantastic opportunity to snag a home at a cheap rate while still taking advantage of robust price appreciation!

There Is One Disappointing Result, However

Unfortunately, all is not good news with the Canadian housing market. The government scrapped long-awaited changes to the mortgage stress test due to the coronavirus. These changes would have lowered the interest rate used for the stress test to something more reflective of the actual interest rates a borrower might have to pay. Instead, banks will still be using the current 5.19% rate instead of 4.89% that they would have used if this rule went into effect.

It's worth noting that this is solely for mortgage qualification, and all this rule means is that nothing changes from today. Nothing gets worse, but, unfortunately, this aspect of the mortgage process won't become better due to the coronavirus.

Is Now A Wonderful Time To Buy?

Yes. Naturally, you have to do what you feel is best for you and your family. However, the recent events of 2020 have created a potential buying opportunity. With falling rates and no evidence, yet, of a significant impact of COVID-19 on the housing market, we have no reason to believe that this is not still a robust market and economy, just with much cheaper mortgages coming!