As the Coronavirus spreads, officially being declared a global pandemic by WHO, we are left wondering how this will impact the housing market. So far, the plunge in yields has cheapened mortgage rates, no doubt providing a temporary lift for Real Estate. However, the obvious question is how will this impact the broader economy, particularly with the coming job layoffs.
To add insult to injury, Canada’s stock market has gone from a bull market to bear in just 14 trading days, wiping out C$454.2 billion, thanks in part to the collapse in oil prices. This will place further stress on Alberta, and have ripple effects across Canada. This will also hit Canadian banks, who have accumulated exposure to the oil & gas sector and may perhaps alter their risk tolerance to extend credit.
The other segment to watch is the travel and tourism sector, which is being crushed. Canada pulls in about 20 million visitors annually so it’s safe to say this will not only hurt hotels but local AirBnb operators who might be relying on that income to service their mortgages.
On Feb., 28, Airbnb changed its “extenuating circumstances policy,” so that hosts and guests in areas affected by travel bans would no longer face financial or platform penalties for bailing on a booking. For context, there are about 128,000 active AirBnb listings in Canada, which includes everything from basement suites to lakefront cottages.
Remember, one mans spending is another mans income. Not good for indebted Canadian households who have the lowest savings rate since the 1960s. Perhaps we will have to put a moratorium on mortgage payments as they have in Italy. Yes you read that right, Italy is negotiating with banks to provide breaks from debt payments including mortgages as it seeks to soften the impact of a nationwide lockdown to contain the coronavirus.
Coming to a country near you?