Though COVID-19 has all but eclipsed the past year, it seems that there is finally an end in sight. In Ontario, the COVID-19 vaccine rollout is not only underway, but is being expedited. The hope is that all adults 60 years of age and older will have received their first dose of the vaccine by early June. A safe, accessible, and effective COVID-19 vaccine will aid in economic recovery in Ontario and ultimately contribute to the health of the real estate market.

Today on the blog, we discuss how the COVID-19 vaccine deployment will shape Ontario’s real estate market in 2021.

 

The COVID-19 vaccine and real estate in Ontario: key takeaways 

  • A safe and effective vaccine will engender sector recovery, which is already being observed in the retail sector. As of January 2021, Ontario retail sales are ahead by more than 60 percent since April 2020. This is thanks to pent-up demand, government income support programs, an uptick in hiring, and a rise in consumer confidence and consumer spending.
  • The vaccine will give peace and mind to those newcomers, including landed immigrants as well as international students, and immigration numbers will begin to rebound. This will be on par with the Government of Canada’s plans to bring in over 1.2 million new immigrants over the next three years. 
  • Interest rates in Canada are expected to persist until 2023. Low interest rates tend to encourage consumer spending, since consumers will have to pay less interest on borrowed money, making them more inclined to make large purchases, such as real estate.
  • Toronto’s real estate market is expected to see recovery after having felt the strongest impacts of the pandemic on the housing market. This is thanks to the workforce returning to their jobs in the city, the return of international students who tend to settle in and near the city centre, and an uptick in tourism.
  • COVID-19 rendered white hot real estate conditions in many outskirt regions and hot conditions are expected to persist. Hamilton, Niagara, Sudbury, and Sault Ste. Marie have all registered record-breaking real estate growth as of January 2021, making them some of the best places to invest in real estate in the years to come.

 

Sector recovery

A safe and effective vaccine will mean that lockdown measures will lift, safety restrictions will soften, and we could see some semblance of normalcy in the near future. As people return to pre-COVID-19 activities, it will give many industries a much-needed boost, foster consumer spending, and reinvigorate the labour market. Some industries that will certainly see an uptick are tourism and hospitality, retail, and the office sector.

That said, we are in early days with regards to the COVID-19 vaccine. And though it will take some time for the economy to fully rebound, we are already seeing some positive developments. For instance, as of January 2021, Ontario retail sales are ahead by more than 60 percent since April 2020. This spike owes to pent-up demand, government income support programs, an uptick in hiring, and a rise in consumer confidence, amongst more. 

 

Rebounding immigration numbers

Canada’s stance on immigration has long since set it apart from comparable economies, such as the US, and Canada’s pro-immigration status will only persist in the years to come. In a move to supplement workers and stimulate the economy, the Government of Canada announced in October 2020 that they plan to bring in over 1.2 million new immigrants over the next three years. That will equate to 401,000 new permanent residents in 2021, 411,000 in 2022, and 421,000 in 2023.

The vaccine will give peace and mind to those newcomers, including landed immigrants as well as international students, and immigration numbers will begin to rebound.

 

Low interest rates

Interest rates in Canada are currently sitting at a record low. And while economic recovery will cause interest rates to rise eventually, this won’t happen any time soon. According to the Bank of Canada, low rates are expected to persist until 2023, at the very least. Low interest rates tend to encourage consumer spending, since consumers will have to pay less interest on borrowed money, making them more inclined to make large purchases.

 

The COVID-19 vaccine and real estate in Ontario

It’s clear that the vaccine will bolster the economy in a number of ways. As sectors recover, the job market will open back up. And as immigration numbers rebound, there will be more workers to fill those jobs. Finally, low interest rates will encourage consumer confidence, leading to large purchases that will ultimately stimulate the economy. 

Many of those “large purchases” will be real estate. It’s a great time to invest in real estate—particularly multi-family real estate. We are at the crux of a nation-wide rental shortage, more people are turning to renting over homeownership than ever before, and Canada’s mortgage rate has been set at a record low of 0.99 percent. 

None of this is lost on buyers and investors, with benchmark prices rising rapidly and property sales outpacing supplies in markets throughout the Golden Horseshoe area. 

Of note is Toronto’s real estate market, which will see gradual recovery after having felt the strongest impacts of the pandemic on the housing market. This will owe to a portion of the workforce returning to their jobs in the city, the return of international students who tend to settle in and near the city centre, and an uptick in tourism.

That said, the momentum from COVID-19 that rendered white hot real estate conditions in many outskirt regions is not slowing down. Though there is finally an end to the pandemic in sight, the opportunity for affordable, great quality real estate in up-and-coming locations has been realized. As such, cities such as Hamilton, Niagara, Sudbury, and Sault Ste. Marie have all registered record-breaking real estate growth as of January 2021, making them some of the best places to invest in real estate in the years to come.