2020 proves real estate a recession-resistant industry

Real estate is a cyclical industry, and over the past few decades, we have certainly seen our ups and downs. Even during the ups, some naysayers in the media have predicted doom and gloom – and they are back again. When COVID-19 hit, sales slowed down for all types of housing, including new condominiums, but prices kept going up. Now, we’re back in business in full force, with sales reaching new heights. Predictions of a frenzy-driven bust hardly seem believable, considering our history
of resilience.

Aside from the recession of the late 1980s and early 1990s, when new condominium buying came to a standstill, the market has bounced back. We always do. And remember that back then, mortgage interest rates were well into two digits. It was more of a banking crisis than anything else. The statement that first-time homebuyers cannot afford to get into the market nowadays and should give up the dream of homeownership is false. People buy their first homes, often new condominiums, every day.

It’s amazing how creative first-time buyers can be. Some receive financial help from their parents or other family members and use money from their RRSPs. Choosing to live in a condo on a public transportation route means not needing to own a vehicle, saving thousands of dollars a year on buying a vehicle; maintaining, insuring and repairing it; and purchasing gas. Some first-time buyers who would love a two-bedroom suite opt to get their foot in the homeownership market by choosing a studio instead and moving up later on. We even see young people co-purchasing with a family member, or more recently a friend, to enter the market and earn equity. The wonderful thing about a condominium is that in this vertical community; those who own compact studios interact daily with and share amenities with penthouse owners, so it is like a great equalizer for people of all ages and backgrounds.

Remember, too, that buying a home or condo contributes toward our economy as a whole. Housing is a huge job-creator. According to BILD, every year, the building, development and professional renovation industry creates hundreds of thousands of jobs and contributes billions of dollars to the local, provincial and national economy.

Keep in mind, as well, that for the past few years while mortgage interest rates have been historically low, more people have been buying real estate, including investors who recognize the value in owning. This trend is not some mad rush after COVID. Real estate has always led the charge in recovery after any recession since the Great Depression. It is happening again now, which is not a surprise to those of us who have worked in the industry for decades. Our industry is resilient, and real estate as a lifestyle or financial investment is resilient.

It is our experience at Baker Real Estate that people come here to Toronto and the Greater Toronto Area from all over the world to realize the dream of homeownership. It is still attainable for far more buyers than the doom-and-gloomers would have you believe.