Mortgage Insurance: What Is It? How Much Does It Really Cost?
Canada’s Economy: How It’s Been Impacted By Covid-19
Canadian life has started to look very different as a result of the pandemic, from how/where we live, to how we shop, eat and work. While few changes have been for the better, COVID-19 could bring about some welcome changes to our economy.
Where we live
The pandemic has certainly wreaked havoc on one of the traditional pillars of Canada’s economy — the housing market.
Physical distancing requirements at the beginning of the pandemic in March was difficult on the real estate industry because realtors couldn’t host open houses, and buyers were concerned about the future. This year was the worst spring for sales in almost 4 decades.
Realtors are trying to reassure the public that the slowdown is just a blip, and that the demand hasn’t disappeared. However, policy-makers are don’t feel the same way. The Bank of Canada is expecting COVID-19 will mortgage issues to more than double the peak they hit during the financial crisis of 2009, and Canada’s national housing agency believes prices could go down by 20% before making a comeback closer to 2025.
Lower prices are bad news for sellers, but a slowdown does represent an opportunity for buyers looking to jump to a market that had gotten away from them.
On a positive note, lenders have been pressured to cut mortgage rates to record lows, which buyers are excited about. Current homeowners too seem to be benefiting from this.
Where we work
The pandemic is also affecting commercial real estate. It may have started a small shift away from the standard downtown office towers, as many question how much they want to live and work in dense urban areas if they don’t have to.
Public transit use plummeted during the pandemic, and has yet to recover even as the economy has started to reopen. Toronto’s cash-strapped transit system has lost $100 million in fares.
On the other hand, bikes are making a comeback and so are their bike lanes. More streets around the country had started adding bike lanes while making roads narrow, but the pandemic has given an opportunity to accelerate that project. However, the demand for cars will go up again as consumers opt for the safety and security of their own self-contained travel bubbles.
“This makes perfect sense as no one wants to be in a crowded space currently for themselves or others,” said Mark Le Dain, head of business intelligence and strategy at Validere, a data intelligence firm that advises companies in the energy sector.
How we shop
Retail is another sector of Canada’s economy that has taken the pandemic on the chin. New numbers released recently showed sales decreased by more than 1/4 this spring, their biggest plunge on record.
While some stores are doing well (business at grocery stores is booming, for example), stores that sell discretionary items are being hit hard for the most part as consumers focus on what they need to get by. Store closures everywhere hit just about every chain, and it looks like many may not recover.
Unsurprisingly, online shopping was the pandemic’s biggest success. Sales more than doubled this spring and now make up almost 10% of Canada’s economy! The Canadian chains that ran into trouble were lacking on the e-commerce side, but retail experts say the crisis prompted businesses to dive into the world of retail online.
“Retailers and suppliers have been forced to build out online shopping capabilities at an accelerated rate,” said retail consultant Bruce Winder, author of new book Retail Before, During & After COVID-19. “Consumers now have the convenience of being able to buy almost anything online and have it delivered or use curbside pickup.”
There’s perhaps no better example of the boom in online selling than the rise of Shopify, the Ottawa-based company that helps real-world stores sell online. Shopify was valued at barely over $1 billion when it went public five years ago. Last month, it has become even riches than the Royal Bank of Canada, and became the most valuable company in Canada. At last count, their worth was over $140 billion! Shopify is a great example of the type of company that could be set to thrive in the post-COVID economy: nimble, innovative and digitally focused.
Tech companies represent a small but growing part of Canada’s economy. The tech sector has grown twice as fast as the rest of the economy in the last decade, and now makes up 5% of Canada’s entire GDP, according to the Bank of Montreal.
Despite the success, tech hasn’t been completely immune to the pandemic slowdown, but the sector hasn’t had nearly the downfall compared to others. The resilience of Canada’s technology sector is an encouraging sign as Canada’s economy tries to reorient itself for the post-pandemic reality.
How we work
The above section now brings us to this; as Shopify itself announced it will now allow its employees to work from home permanently. The company is also known for its fancy headquarters in downtown Ottawa.
Such a move would have been considered unthinkable not too long ago, but the pandemic has hurried along changes in the way Canadians work.
One positive trend emerging from COVID-19 is it has turned flexible work from something that companies used to pretend to care about, into a must-have for any firm hoping to thrive long term, said Jennifer Hargreaves, entrepreneur and founder of a recruitment agency. “The shift was underway before COVID-19, but has certainly accelerated during the pandemic,” she said.
“This is very much about collaboration and making work work better for everybody,” Hargreaves added.
Instead of trying to fix a broken system, companies hiring top talent today are taking flexibility seriously. “That’s where you’re going to see companies thrive,” she said. “That old way of thinking about the economy is not going to be sustainable.”
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