Although only one out of seven market experts believed in August that a real estate crash is imminent, this may not be the case anymore today. Just several days ago, the Canadian Real Estate magazine reported how a study from the Real Estate Investment Network or REIN states that the country’s housing market is in “the early stages of a slump”.

Headlines may have contained rising property values and sales records, in some cases, but the report released by REIN, entitled COVID-19 Special Edition: Real Estate Cycle Update, suggests otherwise.

According to REIN’s vice president of research Jennifer Hunt, “the housing market is driven by the rental market, which is which is driven by economic health like GDP, jobs, and population, and the pandemic has resulted in a tremendous decrease in GDP, job losses, and population has been put on hold with closed borders”.


Once you have idea of the kind of house you want, you will be able to see if your income is steady enough to finance the mortgage. You will also be able to know how much you need to save or spend on the down payment. Generally, homes priced between $1 million and $500,000 will need you to pay up 5% of the initial price and then 10% of the rest. Homes that cost at least a million or more will need a minimum down payment of 20%.

Remember that lenders usually recommend that you find a home that will cost no more than five times your yearly household income. However, you would still need to look into your finances to assess this situation.

She pointed out how it normally takes 18-24 months for a “housing market to catch up to the GDP” and that the decrease in rent and increase in vacancies are just some of the key components that signal the start of a slump.

This has been noticed in the condo submarkets of Toronto and Vancouver, with REIN’s formula concluding that the national housing market is indeed on a decline. This is mainly because the stunted growth of the nation’s GDP has led to a huge hike in unemployment, which drives away immigrants and causes decreased demand of rental properties. This leads to an oversupply in the housing market, which affects property prices.

However, this is not reflected on the noticeable increase in property prices amidst the COVID-19 pandemic – to which Hunt explained as being just “partially smoke and mirrors because the pandemic froze the spring market, and that pent up demand got shifted to now and has driven interest in buying”. She also added how remote workers sought for home upgrades during this time.


The REIN report also advises people against fix and flips, but implies on the “possibility” of buy and holds. Hunt, though, advises investors in Toronto to be cautious about buy and holds while underscoring the viability of buying into multifamily assets. Buy and holds are more feasible in Vancouver, although this should be done further into the housing market slump.


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