Home Purchase Bidding wars and CoronaVirus

impact of Corona Virus

Toronto including the rest of the GTA including Mississauga, Brampton, Caledon, Vaughan, Richmond Hill, Scarborough have recently seen a mad rush for homes after a long period of slowdown. Multiple offers for homes going for sale is a common scennerio and there is an insane amount of mad rush to acquire a newly listed home at any cost. Toronto home sales in February up 45.6 per cent from year ago and likewise the numbers are positive for all other cities.

The Bidding wars are happening evening amidst the onset of CoronaVirus, a contagious Virus affecting the Globe. While the world is reeling under the effect of ConronaVirus, people of the GTA are in mad rush to acquire homes at any cost. Little do they realize that this Virus is going to have a major impact on the Canadian economy and can push the World including Canada into a major Financial recession even worst than that of 2008. Such is an impact of the CoronaVirus that The Bank of Canada had a cut its trend-setting interest rate by half a percentage point to 1.25 per cent down from 1.75 per cent despite healthy economic numbers. The Government is aware that they need to keep the economy floating and push people to buy more. Another cut is the rate is possible in April dropping the mortgage loans down further. The in turn may push the Home bidding wars further leading to a catastrophic system. The home buyers will be inticed further to buy homes well over asking price without realizing that a possible recession due to CoronaVirus may wreck havoc to their investments.

The impact of CoronaVirus if not contained sooner will have a detrimental effect on the Canadian economy. People have cut their travel plans and shopping which is affecting everyone. China had to pay a huge price to contain the Virus which is still not contained. This price tag is going to affect everyone as the Chinese buying power will be affected pushing further looses to the American and European companies. China is considered the manufacturing hub of the world and currently there is a huge shortage of labor. The production lines are down which is affecting the supply chains for all products including Auto, Clothing and even Pharmaceuticals. China’s president Xi Jinping has already warned that the coronavirus would have a “relatively big impact on the economy and society”. The lockdown of the Chinese province Wuhan had brought Chinese businesses in that area to their knees which literally no export. The Businesses are running out of cash and people are being devoid of going out and work. The cost of Virus Control will run into billions of dollars affecting the Chinese economy which is already reeling under trade war with US. The 2003 SARS outbreak, which infected about 8,000 people and killed 774, cost the global economy an estimated US$50 billion. The 2015 MERS outbreak in South Korea, meanwhile, infected 200 people and killed 38, but led to estimated costs of US$8.5 billion. Already the coronavirus epidemic has had a greater economic effect than either of the predecessors.

The outbreak has the potential to cause severe economic and market dislocation. But the scale of the impact will ultimately be determined by how the rest of the world is doing to contain the spread of the Virus. Italy, Iran and South Korea have been largely affected outside china and reporting surge in daily infections and deaths. The number of infections worldwide is more than 107,000, with about 3,600 deaths. These number may not be in correct as some Countries such as Iran may not be providing the correct stats. Iran, one of the worst hotspots outside China, has now confirmed 6,566 infections and 194 deaths. However, the real figure is feared to be much higher. One report on Sunday, quoting a government envoy, said there had been 200 deaths in the northern Gilan province alone – but the figures were later removed.

Other countries have also reported surge in new infections and deaths. Another great recession is imminent unless a remedy to Control the spread of CoronaVirus is introduced soon. Until then, people needs to take caution and make good judgement on purchasing a real estate or any investment for that matter. Let’s sincerely hope this Virus is quickly controlled.