Housing markets across Canada are expected to remain steady through 2021, with increased competition as a result of pent-up demand and limited inventory. The low-interest-rate environment is encouraging potential homebuyers who are looking to either enter into homeownership for the first time, buy an investment property, or expand their portfolio, to take the plunge. However, the extended impact of COVID-19 is changing the experience and expectations of homebuyers in several different ways. Homebuyers’ preferences are taking a turn, and it’s important for real estate professionals to bear in mind what’s hot in the market.
Location, location, location – A recent BMO housing survey found that 29% of first-time homebuyers are changing their search from a major city to the suburbs or rural areas. Canadians have started to reprioritize what they want in a home. Real estate in rural and suburban areas generally offers more space and costs less, and the core has lost much of its appeal as work commutes and visits to restaurants and bars have come to a grinding halt. For these reasons, many are finding the idea of moving out of the urban core more attractive than ever before.
Multipurpose rooms – The same survey found that a quarter of surveyed Canadians are opting for a detached home versus a condo or townhome. Whether it’s more space to accommodate home offices, home gyms, or a growing family, more homebuyers are looking for increased square footage. As many workplaces are considering permanent work-from-home arrangements, this is becoming an increasingly attractive asset to homebuyers.
Greenspace – House hunters are reportedly prioritizing outdoor space. Greenspace is becoming an attractive asset to homebuyers with growing families, or even single adults who are spending most of their time at home because of the pandemic. In some cases, the motivation for wanting outdoor space is simply an area to grow food.
It’s easy to see how homebuyer preferences are evolving, but that’s not all. The profile of homebuyers is also changing, partially as a side-effect of the pandemic’s impact on the economy.
Generation gap – Millennials and Gen-Z buyers are expected to play a growing role in the housing market, especially as the largest cohort of millennials are about to turn 30. However, as prices increase, these buyers will face greater challenges when it comes to traditional financing. Mortgage brokers who want to target this growing market of homebuyers will need to offer alternative and creative financing options. In addition, older millennials may be ready to trade-up, contributing to the increasing demand in the suburban and rural housing markets.
Non-traditional income – As the nature of work changes, many Canadians are turning to freelance work, and side hustles to complement their traditional income, or in some cases, turning those side hustles into full-fledged self-employment. Through 2020, as COVID-19 challenged those in the workforce across multiple industries, many have been pushed to get creative and find new revenue streams to keep up with their daily expenses and financial goals. With economic uncertainty expected to last through 2021, mortgage brokers will be faced with more potential homebuyers who are either self-employed or have less-than-traditional sources of income. Private lenders offer less stringent qualification guidelines and are much more “big picture” oriented compared to traditional institutions.
Open to technology – Before the COVID-19 pandemic, technology had already found its way into many aspects of our lives, whether it’s shopping, ordering food, and even perusing houses for sale on different websites. With social distancing rules, people of all ages have had to get comfortable with new ways of doing things, including virtual meetings, home tours, and even closings. Potential home buyers have not only come to embrace new technology, they have come to expect it. Partnering with lenders who are committed to providing their brokers with innovative technology will be key going forward.
To maintain a competitive edge this year, brush up on your digital marketing plans, grow your expertise in alternative lending, and find new ways to connect with the growing market of millennial and Gen-Z borrowers, because this “new normal” isn’t going anywhere.
