The COVID-19 pandemic, and the resulting provincial school and economic lockdowns, have been a unique time for the Canadian housing market. As people remained indoors amid mandated stay-at-home orders, the concept of home became more than just a roof over our heads, expanding to include the workplace, school, workout space, and entertainment centre.
This has driven unprecedented sales and price growth over the course of 2020 and 2021; according to the Canadian Real Estate Association (CREA), national sales spiked 235% between April 2020 and March 2021, pushing the average home price up by 44%. New buying trends that accounted for lockdown lifestyle needs emerged, such as the desire for at-home office space, green space, and accessibility to delivery services. As more people worked remotely, housing demand boomed in smaller cities and towns, fueling urban flight.
However, now that lockdown measures have largely lifted across Canada it’s apparent these pandemic-driven trends are starting to shift. Buyer urgency has clearly subsided as the July CREA data reveals sales are now dipping below year-ago levels, and the pace of price growth is starting to calm on a monthly basis. As the economy and society at large re-opens, how have real estate sentiments changed among Canadians?
To find out, Zoocasa surveyed over 1,400 respondents to get a pulse on their post-lockdown preferences regarding desirable home characteristics, housing affordability, and the ability to work from home. The findings were then compared to like-for-like responses collected in February 2021 – amid a record-breaking real estate market – to gauge how feelings have changed from during to after lockdown measures.
Canadians Increasingly Feel Home Prices are Out of Control in Smaller Markets
According to the survey results, Canadians are considerably more likely to feel home prices in suburban areas and smaller towns have increased at unsustainable levels; a strong majority of 77.2% of respondents agreed, which is a 25.4% increase from when this question was asked in February 2021.
Overall tight market conditions are top of mind – when asked about the main areas of concern when purchasing a home, respondents indicated affordability, engaging in a bidding war, and timing the market were the top three.
Canadians Feel Low Mortgage Rates are Harming More Than Helping
To help stimulate the national economy during the jobs and spending downturn that occurred during the pandemic lockdown, the Bank of Canada – the central bank that establishes the country’s monetary policy via its trend-setting interest rate – has kept the cost of borrowing at a record low. The Overnight Lending Rate, which consumer banks use to set their own mortgage and lines of credit rates, has been 0.25% as of March 2020.
This has led to lenders offering record-low mortgage rates, and this cheap cost of borrowing has been a contributing factor to sales and price growth over the course of the pandemic. According to the survey findings, Canadians are increasingly in disagreement that today’s low cost of borrowing is making it easier to buy a home. While 47% agree that low mortgage rates have improved affordability for home buyers, that’s a slight decrease from February. Meanwhile, 34.4% of respondents disagreed with that statement – an increase of 12.1%.
Overwhelmingly, Canadians feel low mortgage rates are driving up the prices of homes; 80.5% indicated they agreed with that statement (up 32.8%), while 7.4% disagree (+4.1%). Overall, 38.1% of respondents agree that low mortgage rates have impacted their desire to buy a property.
Nearly 25% of Canadians to Take a Hybrid Approach to the Workplace
As economic re-opening plans take effect across Canada, many employers are announcing what their post-lockdown strategies will entail. For those who moved away from city centres due to their ability to work remotely, this has raised the question of whether some will need to return, potentially fuelling a new buying trend.
According to the survey data, -7.1% fewer respondents reported they will continue to work from home following the end of COVID-19 lockdown measures, at a total of 29.7%. An additional 24.2% reported that they have a hybrid working arrangement, which is an increase of 6.4%. Meanwhile, the number of respondents currently working solely from the workspace remained unchanged from the February response.
Home Offices and Green Space Still Highly Sought After, But Less Than in the Spring
As many Canadians continue to work remotely, homes with office space continue to be in high demand – though at a lesser rate than in February, perhaps indicating a renewed interest in urban living. A total of 43% of respondents stated that office space has become a more desirable home characteristic, a change of -15.9%.
A large majority (65.8%) said outdoor space remains at the top of their lists, indicating that a yard, deck, or balcony has become a more desirable characteristic, though this also marks a -10.5% decline from February.
Finally, access to delivery service remains top of mind, with 55.4% of respondents saying it is more important, though also down -8.10% from February, perhaps reflecting expanded access to in-person shopping.
The Majority of Those Looking to Buy Have a Household Income of Over $100,000
As the national average home price has increased to above $600,000, prospective buyers need to have increasingly higher income levels in order to be competitive in the market. According to the survey, of those who indicated they’re looking to buy a home (56.55% of respondents), 50% have a household income of over $100,000. Of these, 20% are in an income bracket above $160,000, while 32% report an income below $100,000.
This was reflected even in the most affordable segments of the market:
Of the respondents who indicated they wished to purchase a condo (14.46%), 49.15% reported an income over $100,000. A total of 27.97% are below the $100,000 range, while 22.8% prefer not to answer.
Of the respondents who indicated they wished to purchase a detached house (62.38%), 50.4% have an income above $100,000, and 32.4% below (17% prefer not to answer).
Of the respondents who indicated they wished to purchase a semi-detached house (7.23%) 52.5% have an income above $100,000, with 35.5% below (11.8% prefer not to answer).
Of the respondents who indicated they wished to purchase a townhouse, (12.25%), 48% have an income above $100,000, with 36% below (16% prefer not to answer).
The findings are based on an online survey conducted by Zoocasa between August 2 and August 11, 2021 of 1,485 respondents in Canada. A margin of error cannot be assigned because it is an online survey, however, the margin of error for a comparable sample of the same size is plus or minus 2.0 percentage points, 19 times out of 20.
*Combination of 4 and 5 responses from range where 1 = not at all concerned, 3 = neutral, and 5 = extremely concerned.
**Combination of 1 and 2 responses from range where 1 = not at all concerned, 3 = neutral, and 5 = extremely concerned.
***Combination of 4 and 5 responses from a range where 1 = strongly disagree, 3 = neutral, and 5 = strongly agree.
****Combination of 1 and 2 responses from a range where 1 = strongly disagree, 3 = neutral, and 5 = strongly agree.
*****Combination of 4 and 5 responses from range where 1 = much less desirable, 3 – neutral, and 5 – much more desirable.
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Zoocasa is an award winning brokerage that uses data and technology to deliver an intelligent, end-to-end real estate experience to buyers, sellers, and renters in Canada.
Penelope Graham is the Managing Editor at Zoocasa, and has over a decade of experience covering real estate, mortgage, and personal finance topics. Her commentary on the housing market is frequently featured on both national and local media outlets including BNN Bloomberg, CBC, The Toronto Star, National Post, and The Huffington Post. When not keeping an eye on Toronto's hot housing market, she can be found brunching in one of the city's many vibrant neighbourhoods, travelling abroad, or in the dance studio.