Mortgage Professionals Canada (MPC) released its latest in a series of housing market reports that examine how COVID-19 is affecting consumer sentiments towards housing and mortgages. The data further confirms Canadians’ confidence in the security of homeownership, especially as COVID-19 and the lack of a clear COVID vaccine timetable further entrenches life at home and personal safety as defining priorities for Canadians.
This fifth installment of the Rapidly Evolving Expectations in the Housing Industry survey was written by MPC’s Chief Economist Will Dunning. The report surveyed 1,000 Canadians, comprising a wide sample of home owners with mortgages, renters and others, including people who live with their parents. This survey occurred during January 14 to 25, 2021.
“This latest report, our first survey of 2021, continues to demonstrate that homeownership is the aspiration of an ever-greater percentage of non-owners,” said MPC President and CEO Paul Taylor. Bank of Canada Governor Tiff Macklem’s August 2020 assurance “that interest rates are very low and they’re going to be there for a long time,” along with a very strong desire for personal change, “definitely altered calculations and timelines for buyers,” said Taylor. Dunning agreed: “While prices are now rising rapidly in many communities across Canada, extremely low interest rates have more than offset the effects of higher prices. When I did the calculations, I was surprised to find that affordability has actually improved in the past few months. The consequence is that interest in buying is currently far in excess of the available supply, and the imbalance between demand and supply is resulting in very rapid price growth across Canada. Clearly, not everyone who wants to buy a home will be able to.”
Since this family of surveys was started roughly seven months ago, the desire of non-owners to buy a new home soon has almost quadrupled. In each of the five waves of this survey, the percentage of non-owners who expect to buy a home in the coming year has increased, and is sharply higher compared to the 7% figures seen pre-pandemic, at 14% in the first wave of this survey, and 27% in this current survey.
Even at the best of times, economic forecasting is challenging and uncertain. The challenges have become even worse during the COVID-19 period. Back in April and May, when fear was rampant about risks to our health and the economy, and the housing market became very quiet, very few experts expected or predicted that the home buying would rebound as strongly as it did, that new records would be set in 2020 for sales and prices, or that the wave would last as long as it has.
As an alternative to forecasting, these surveys have created some new data on shifting attitudes and expectations about the housing market, to help us interpret evolving market conditions, and possibly provide clues about future changes. Dunning added “The data from our survey provides an explanation for what’s happening in the housing market: Canadians in very large numbers are re-organizing their housing situations. It is possible, but far from being guaranteed, that this active process of re-organization could last for quite some time.”
The report comments on data from the federal housing agency, Canada Mortgage and Housing Corporation (CMHC), which shows that the rental sector is also being re-organized. Vacancies have increased for apartments, as tenants are tending to move towards low-rise dwellings. Unfortunately, that data only arrives annually. The report, notes that, for other major economic activities of similar scale, data is produced monthly. Producing the CMHC rental market data more frequently, at least quarterly, would be immediately useful to governments, the private sector, and consumers, all of whom must make important decisions quickly through COVID and beyond.
Today’s Report #5 and our previous reports can be read here.Tweet