What's driving real estate demand?

According to Mortgage Professionals Canada's report 'Rapidly Evolving Expectations in the Housing Market', there has been no change in Canadian's desire to be homeowners despite the pandemic. Instead, there has been an increase in the number of Canadians who plan to buy their first home within the year and a drop in the percentage of those who expect to never buy a home. At the end of 2019, 14% never expected to own a home and that had dropped to 3%.


There are a few reasons for why an increasing number of Canadians want to become homeowners:

Interest Rate and FOMO

Low mortgage rates and low interest rates has meant that more people see buying a home as being more affordable than before the pandemic, despite the increase in prices. In 2019, only 7% of those surveyed planned to buy their first home. This number jumped to 27% according to the MPC survey conducted at the end of January 2021. Another reason for wanting to buy a home while interest rates are low is the belief that this is an opportunity that cannot be missed. Fear of missing out (FOMO) on a great mortgage deal is driving some first-time home buyers.


Demand has been strong for the last six months and is clearly not going to diminish soon. However, the available supply is low, which has resulted in rapid price growth. Not everyone who wants to buy a home will be able to do so. However, there may be some hope for those living in Toronto. If the vacant home tax is implemented, more than half of investors surveyed by IPSOS said they'd sell or rent their units. Of these 40% said that they would sell their vacant investment properties.


Confidence and Optimism

There was considerable pessimism when it came to confidence about the economic outlook and it is still lower than at the end of 2019. Despite this, attitudes are more positive than at the end of 2019 when considering whether now is a good time to buy a home. There is also a high degree of confidence that real estate is a sound long-term investment, though Canadians so see a home as a place to live first and as an investment second.

Demand for real estate has not diminished during the pandemic and is still considered a sound investment.

 Though the pandemic has negatively affected employment and consequently, the finances of many, 30% of those surveyed expect things will improve. Only 10% think their situations will worsen and almost half don't expect any change or very little. Of those who have been affected financially, 40% expect their situation to improve.


Space and WFH

Canadians are looking for larger homes. With many people working from home (WFH), size and location of homes has become increasingly important. The desire for home offices is one driving force. The other is the lack of outdoor spaces. Of those surveyed, 6% of non-owners want to move out of apartments and condos to homes that have larger outdoor spaces, as their outdoor spaces (i.e. balcony, garden) didn't support their mental health when quarantined. This is partly why city dwellers have been buying the suburbs, towns and farther afield. The expectation is that they will continue to be able to work remotely, or flexibly. According to MCP's report, homebuyers do not regret their investment.

Ontarians thinking about buying a home should consider the following:

  1. Getting pre-qualified to get an idea of what is affordable
  2. The benefits of an energy efficient home and the partial refund available on the cost of a mortgage loan through the CMHC Green Home Program
  3. Consider all lender options to find one that fits your needs. Don’t limit yourself to just banks. Consider monoline lenders and alternative lenders, too
  4. Projections for the economy in 2021 based on the Bank of Canada’s first Monetary Policy Report of the year
  5. Get an estimated valuation of their current home if they are looking to sell and buy a new home. To get a free home valuation estimate report, click here

At GreenFlow Financial, we offer diverse options through over 50+ banks, monoline lenders, credit unions, trust companies, and exclusive private investors and lenders, to find an option that best meets their situation.

We take the time to discuss each client’s goals and situation, so our clients get options that best suit them. We keep our clients updated throughout the process and go above and beyond to ensure the experience is smooth and satisfactory.


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GreenFlow Financial is an award-winning mortgage brokerage firm based in Toronto and Ottawa.

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