‘An unexpected prize for young Canadians’: How the pandemic helped a wave of first-time home buyers get into the market

Stephanie Chouinard always carried a bottle of Purell in her handbag while visiting prospective homes. Like many things, house hunting during the pandemic required some precautions.

For Chouinard and her husband, Sean, the pandemic was the perfect time to buy. The banks were cutting interest rates, and the couple managed to pull the money they'd invested in mutual funds right before the market crashed in March 2020.

That was enough for us to make a down payment," Chouinard said.

If we'd waited two more weeks to take our money out, we would have lost so much more on our investments. That's kind of terrifying to think about, in retrospect."

The new homeowners are among many young people to enter the housing market during the pandemic.

According to a new survey from Royal LePage, of all Canadian homeowners between 25 and 35 years of age, 25 per cent of them purchased their property during the pandemic. Among those surveyed in Ontario, 68 per cent of young nonhomeowners say they intend to buy within the next five years.

The results are indicative of an unlikely plot twist that house-hungry millennials have been experiencing since the pandemic began. In January 2020, when housing prices were expected to soar, many would-be buyers entered lockdown feeling priced out of the market. But the pandemic sent home sales tumbling in the Greater Toronto Area and beyond, sparking optimism among young people who'd held onto their salaries despite all the closures.

For some, a sputtering economy has paid off.

The pandemic provided an unexpected prize for young Canadians - a path to home ownership," said Phil Soper, president and CEO of Royal LePage.

Mortgage rates fell to historically low levels and the competition for entry-level housing lessened. Many investors sought to divest of property as traditional renter groups such as foreign students, new immigrants and short-term renters disappeared behind closed borders."

Economic downturns are often a chance for young people to enter the housing market, as that's when interest rates are often at their lowest, said Soper. During the financial crisis of 2007-08, Soper says he remembers a wave of young people searching for low-cost housing.

But a poor economy also narrows supply, creating an intensely competitive market. Older homeowners have been generally more reluctant to put their property on the market during the pandemic, which has contributed to an almost critical shortage of listings throughout the country, Soper noted.

The health crisis dissuaded many of our older homeowners from selling," he said. They've delayed their desire for a housing upgrade until the medical crisis is under control."

Toronto housing prices dipped to their lowest during the pandemic in the months following the first lockdowns. In April 2020, home sales dropped 69 per cent year-over-year. The average home price in Toronto in April was $821,392.

The pandemic has also encouraged young people to seek housing outside Toronto, the report says. Overall, 39 per cent of respondents said they were considering a move from their current home to a less dense area.

Chouinard and her husband purchased their home in Toronto, but it took them renting into their 30s to do so. A friend of hers recently left the city after nearly a decade due to the lack of affordability, she said.

For young homebuyers, it's almost as if the pandemic came at the perfect time.

In many ways, the pandemic has sucked the joy out of our normally kinetic young adults' lives. No dining out, no concerts with friends or winter escapes to the sunny south," Soper said.

The silver lining is in soaring savings, unspent money that is finding its way into real estate investments."

Jacob Lorinc is a Toronto-based reporter covering business for the Star. Reach him via email: jlorinc@thestar.ca