The global landscape has undergone unprecedented changes in recent months, with economies worldwide grappling with the impact of the COVID-19 pandemic. As countries navigate the path to recovery, the real estate sector, a cornerstone of economic stability, faces critical questions about its resilience and rebound potential. For Canada, a comprehensive report from Re/Max offers a promising outlook, suggesting that lessons learned from earlier-impacted economies, combined with strong domestic indicators, point towards a swifter market recovery than initially anticipated.
Drawing parallels with nations that first experienced the pandemic’s significant economic and social disruptions, Re/Max Canada highlights the opportunity for Canada to assess potential rebound patterns in its own economy and real estate market. This strategic perspective, coupled with a recent study conducted by Leger and commissioned by Re/Max, provides a robust foundation for optimism, indicating that the Canadian housing market may improve with remarkable speed.
Understanding the Canadian Real Estate Landscape: Resilience Amidst Disruption
Christopher Alexander, EVP and Regional Director for Re/Max of Ontario-Atlantic Canada, acknowledges the initial shock to the market. “The market has definitely seen a steep decline in the volume of transactions in the last few months,” he notes. However, a critical observation surfaces: “in much of Canada, transactions have been happening and prices in particular have been resilient.” This resilience in pricing, even amidst reduced transaction volumes, serves as a powerful indicator of underlying market strength and buyer confidence.
The evolving economic environment further fuels this optimistic forecast. As economies across Canada begin their phased re-opening, and considering recent surges in activity observed in various Canadian cities, alongside certain European and U.S. markets, Alexander anticipates a significant shift. “We anticipate that demand could begin to improve much faster than we initially anticipated at the beginning of COVID-19,” he states, pointing to pent-up demand and renewed consumer confidence as key drivers.
Early Indicators: Toronto, Ottawa, and Vancouver Lead the Way
Specific urban centers within Canada are already showcasing tangible signs of recovery, acting as bellwethers for the national market. Alexander singles out Toronto, Ottawa, and Vancouver as areas “already experiencing an uptick in activity and a number of multiple-offer scenarios.” These occurrences are not merely anecdotal; they represent concrete evidence of robust buyer interest and competitive market conditions, challenging earlier pessimistic predictions. Such activity “points to a post-lockdown housing market outlook that is not nearly as dire as some suggested,” offering a beacon of hope for other regions.
Promising housing activity in areas of Europe and USA gives Canada’s real estate market hope as economies reopen (CNW Group/RE/MAX Canada)
Canadian Consumer Confidence: A Foundation for Recovery
The Leger survey provides invaluable insight into the mindset of Canadian consumers regarding the real estate market. The findings underscore a strong intent to engage with the market in the near future: “56 per cent of Canadians who are planning to engage in the real estate market expect to do so in less than a year.” This significant percentage indicates a substantial pool of ready buyers and sellers, poised to re-enter the market as confidence grows and restrictions ease.
Furthermore, the survey reveals a widespread belief in a rapid market bounce-back. “Almost half of those surveyed believe that the real estate market will bounce back to the strength it was before COVID-19 by 2021,” demonstrating a collective optimism about the market’s intrinsic health. Even more encouraging is the segment of the population—”29 per cent”—who anticipate that “the real estate market in Canada will return to its pre-pandemic strength” before the end of 2020. This robust consumer confidence is a crucial ingredient for any swift market recovery, translating into tangible activity and sustained demand.
Global Precedents: Learning from European Market Recovery
The experience of various European markets, which faced the pandemic’s brunt earlier than North America, offers a compelling blueprint for potential recovery trajectories. These international case studies provide valuable insights into market dynamics under similar pressures, highlighting the potential for swift rebounds driven by pent-up demand.
Austria: A Surge in Accumulated Demand
In countries like Austria, where lockdown restrictions began to ease relatively early, Re/Max brokers and agents reported a remarkable trend. Recent demand for real estate was not only higher than during the peak of the COVID-19 crisis but even surpassed levels seen in the same period of 2019. Re/Max Europe attributes this vigorous resurgence to “accumulated demand that fell dormant during quarantine but has since returned in a manner greater than has been experienced in other countries.” This phenomenon suggests that rather than disappearing, buyer interest was merely delayed, creating a powerful wave of activity once conditions allowed.
Norway: Stability Through Transparency and Technology
Norway presents another illuminating example, particularly given its comparability to North America in terms of real estate technology and market transparency. The Norwegian market experienced its nadir during the week of March 16, with sales declining a stark 36 percent year-over-year. However, the recovery was swift and steady. By May 2020, sales were clearly trending upward again, remarkably reaching levels just 7.5 percent below the activity recorded in May 2019. This rapid recovery demonstrates the market’s capacity to absorb initial shocks and quickly regain momentum.
Listing trends in Norway mirrored this pattern of initial shock followed by recovery. An initial 10-percent drop in listings during the early days of the lockdown escalated to a 50-percent decline. Yet, by May 2020, listings had returned to the market, settling at 18 percent below May 2019 levels. Re/Max Europe’s assessment highlights Norway’s signs of stability as restrictions continue to ease and consumer confidence makes a strong comeback. It is estimated that the Norwegian market could fully bounce back to sustainable levels by the end of 2020, offering a tangible timeline for other recovering economies.
Italy and Spain: Navigating Persistent Uncertainty
In contrast, markets in Italy and Spain, among the hardest-hit regions in Europe, are only now beginning their tentative reopening. The company notes that “current levels of uncertainty combined with the quickly-changing environment diminishes the reliability of any forecasting in the short term.” This cautionary observation underscores the importance of regional differences and the varying degrees of pandemic impact and containment efforts.
Kurt Lukas, EVP of Re/Max Europe, elaborates on the complexities of these diverse markets. “It’s still too early to tell when the housing market across Europe will recover to pre-COVID-19 levels, particularly given the asymmetry of countries and cities concerning their economies, regulatory processes and pandemic containment efforts,” he explains. Despite the varied recovery speeds, one consistent theme emerges: “What we do know is that COVID-19 has shifted the practice and focus of our industry as a whole.”
The Future of Real Estate: Adaptations and Evolving Trends
The pandemic has undeniably accelerated the adoption of technology and influenced consumer behavior within the real estate sector. Lukas points to “the increased use of technology such as virtual tours, e-signatures or video conferencing by consumers and real estate agents” as a lasting change. These digital tools, once considered conveniences, have now become essential, fundamentally transforming how properties are viewed, marketed, and transacted. This digital pivot enhances efficiency and accessibility, likely becoming a permanent fixture of the industry.
Beyond technological shifts, the pandemic may also instigate “a potential shift in buyer trends, such as different types of properties.” As remote work becomes more prevalent, buyers may prioritize larger homes, dedicated office spaces, or suburban/rural locations over dense urban centers. The emphasis on “economic resilience” also suggests a newfound appreciation for market stability and long-term investment value. These evolving preferences will shape future housing market dynamics and product offerings.
Re/Max Canada’s Collective Outlook: A Gradual but Resilient Recovery
Aligning with the insights gathered from international markets and domestic consumer sentiment, Re/Max of Ontario-Atlantic Canada and Re/Max Western Canada collectively estimate a gradual, yet robust, return to normalcy. Their forecast suggests that “the housing market is likely to gradually begin its return to sustainable, healthy levels toward the end of 2020.” This timeline reflects a belief in the market’s underlying strength and its capacity to absorb and adapt to unprecedented challenges.
Elton Ash, Regional EVP for Re/Max of Western Canada, echoes this sentiment with resolute optimism. “Canada’s housing market was strong before COVID-19 hit, and despite the tragic impacts of the pandemic, we are optimistic that housing market could be restored much sooner than initially expected,” he affirms. This statement underscores a core message: the Canadian real estate market possesses inherent strengths—such as a robust economy, controlled immigration, and a stable financial system—that position it favorably for a post-pandemic recovery. While the path ahead may require continued vigilance and adaptation, the prevailing sentiment is one of confidence in the market’s enduring resilience and its promising trajectory towards pre-pandemic vitality.