Hi there, I had to read an RBC report on the "Seven ways COVID-19 is disrupting Canadian housing" (2020), and I responded with the first two questions, but not the last. The question that needs an answer is the bolded one. Thanks!

Q: What are the main drivers of the housing market in Canada? How is the Covid-19 pandemic going to impact those factors? How might their prediction affect the Canadian economy in the context of the open market IS-LM framework?

A: Traditionally, city addresses had been most popular among homebuyers prior to COVID-19, and some of the main drivers into cities are high employment, an influx of immigrants and migration from other provinces. However, the pandemic had dramatically shifted the landscape of Canadian real estate in seven different ways:

1. Lockdown was implemented in March of 2020, which is typically a high season in the market, suspending open-houses and nearly halted all sales. However, when restrictions began to loosen during the summer, there was record high activity in July-August, shifting the peak resale season into the summer.
2. Rental markets declined in some major cities such as Vancouver, Toronto and Montreal, primarily due to renters experiencing financial hardships from job losses, and many of whom are younger Canadians. Additionally, excess rental supply can be attributed to border closures where foreign students had to remain in their home country and study online instead of their post secondary institution in Canada.
3. As a consequence of excess rental supply, condos spiked in sales in the aforementioned cities too, especially since newer condos (compliments) were being built at the same time.
4. Because of restrictions such as lockdowns and social distancing, in addition to working and studying from home, city life was losing its appeal. However, the cottage market bloomed because people were drawn to smaller towns with larger living spaces as an alternative.
5. Canadians received more money in CERB by the second quarter than they had lost in wages/salaries, $56 billion>$23 billion respectively. Therefore, household disposable income increased by 11% which increases buyers' purchasing power, making houses, in essence, more affordable.
6. The flow of immigrants had slowed substantially, which affected the key pillar of Canadian housing demand greatly. If weak immigration is prolonged, this may have a negative impact on the future cohorts of first time buyers.
7. 16% of mortgages in bank portfolios opted to defer payments until the end of August. This defensive tactic can potentially cause financial strains where a large portion of properties would go on sale.