COVID-19 Real Estate Crash

Why Hasn’t COVID-19 Crashed the Real Estate Market?

Last updated on February 2nd, 2021 at 12:41 am

Canadians everywhere are asking: “Why hasn’t COVID-19 crashed the real estate market?” COVID-19 was supposed to be the one thing that knocked the market down a few pegs. Even the Canadian Mortgage and Housing Corporation (CMHC) made the following bearish prediction:

Our forecasts indicate that the average MLS® price will decline by 9% to 18% from its pre-COVID-19 level. Prices will begin to recover in the first half of 2021.

Source: CMHC

Since that prediction, we’ve seen employment start to come back, most provinces are now completely open, and COVID-19 cases in Canada are under relative control. Homeowners have let out a healthy sigh of relief, while those hoping to enter the market one day feel angry that their expectations for a crash weren’t (yet) realized.

Redditors expected COVID-19 to crash the real estate market.
Millennials share their outrage on Reddit.

So that begs the question, why hasn’t COVID-19 crashed the real estate market in Canada?

Rates Drive the Market

It’s quite easy to explain why real estate prices haven’t dropped. The first reason is interest rates. Mortgage interest rates in Canada have been low for years, but only since COVID-19 have you began to see ridiculously low rates. Rates as low as 1.65% can be found all over the internet, and can usually be had through a simple call to your mortgage broker. Here’s what I find over at

COVID-19 has pushed mortgage rates to an all time low.
Select mortgage rates from

With rates so low, buyers that were previously sitting on the sidelines have now been encouraged to get into the market. And why not. At 1.65%, if you’re buying a $600,000 home with 20% down, that amounts to a mortgage payment of only $1,690 a month on a 30-year amortization. Just last year, the same buyers would have been shopping around for rates in the 2.5%-3.0% range – I know I was. The same purchase last year at 2.75% would have resulted in a mortgage payment of $1,956. That means buyers shopping for a similar home today are seeing their purchasing power increase to the tune of $266 per month! That makes saving for a down payment even easier.

Deferrals Have Mitigated the Damage

The second reason is mortgage deferrals. Soon after COVID-19 began, the CHMC announced that they were allowing mortgage deferrals (facilitated through lenders) on their huge pool of insured mortgages. Canada’s “big 6” banks and other lenders have also been proactive in reaching out to borrowers and allowing them to defer their mortgage payments on a case-by-case basis on uninsured mortgages as well.

As of last month, over 743,000 Canadians have deferred or skipped mortgage payments. The effect of these deferrals has been that most homeowners that lost their job haven’t had to sell their home. Homeowners with a cushion of savings or equity have done especially well. Even if they lost their jobs, homeowners have been able to defer mortgage payments and collect CERB for months. With the economy starting to come back, there’s a good chance these homeowners will make it through the crisis relatively unscathed.

Homebuyers Mostly Unaffected

Most people who lost their job due to COVID-19 weren’t shopping for homes in the first place. This was reported most succinctly by the CBC back in April, just as employment losses were starting to bottom out. They reported that:

Jobs in restaurants, hotels and retail made up about half of all the job losses, and jobs that were lower paying to begin with were more likely to get cut during the month.

Source: CBC

Reviewing the Statistics Canada employment data shows just disparate the effects of COVID-19 were. Here’s the data for a few select occupations:

Why didn't COVID-19 job losses crash the real estate market?
COVID-19 job losses for select occupations from Statistics Canada.

As you can see, employees in the service industry felt the effects of COVID-19 head-on. Job losses in that industry reached as high as 25%, with reductions in hours and wages affecting far more. Canadians working in higher paying industries faired far better, including those with health, education, business, and science occupations.


I hope my article has helped you make sense of what’s been going on in the real estate market today. Like many Canadians, I also thought COVID-19 would have immediate effects on the price of Canadian real estate. When I saw that wasn’t happening, and that prices were increasing in many areas, I knew I had to start digging into why. I plan to write more articles on COVID-19 and how it’s impacting Canadian real estate. If you’d like to read those articles, I encourage you to sign up for my newsletter or follow me on social media.

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How has COVID-19 affected your opinion of the Canadian real estate market? Did you predict a crash? Do you think a crash might be right around the corner? I’d love to hear your opinions and thoughts in the comments below!