Open For Business: Canadian Real Estate and the New Normal.
As Canada starts to experience a flattening of the COVID-19 curve, we’ve already seen businesses start to reopen their doors and life resume to some semblance of normalcy. Here in Ontario, retail outlets offering curb-side pick-up, hardware stores, garden centres and provincial parks are among the newest places given the green light to open alongside those that have already been classified as essential businesses, such as real estate services, which have continued to operate under strict guidelines throughout the pandemic. Here are some insights on what Canadian real estate might look like in the coming weeks and months.
Canadian real estate after COVID-19
There’s a cautious optimism in the air, with social distancing rules still in effect and Canada’s chief public health officer Dr. Theresa Tam warning that a vaccine is still in the early stages of development. According to this weekly survey by Leger, 57 per cent of Canadians are stressed about leaving home and being in public. With social distancing measures likely to continue for some time, what will Canadian real estate look like once lockdowns are lifted?
Canadian real estate trends to watch
Virtual Real Estate
Virtual real estate tools were already commonly used to enable overseas transactions. During this pandemic, even local buyers have become “long-distance buyers” due to social distancing measures, and this trend has officially gone mainstream. While it’s here out of necessity, it is the convenience of it that will make virtual deals part of the “new normal” in real estate.
“We’ve seen a massive uptick in the use of technology to facilitate virtual deals over the past few weeks. Given that people may still need to proceed with buying and selling for a host of different reasons, this makes it possible and safe – and agents have the tools,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada.
RE/MAX brokers and agents report that consumers have been receptive to technology that makes buying and selling a home possible during the pandemic. In fact, whether they realize it or not, most homebuyers are already leveraging technology, with online listings as their first and most-basic foray into prop tech. From there, high-quality photographs and videos, virtual real estate tours with real-time messaging, and e-documents taking virtual deals to a whole new level. In-person viewings are reserved only for the front-runners, and with strict guidelines in effect. Out of convenience and in the interest of saving time, we expect this trend to continue.
Personal Protective Equipment
Real estate has traditionally been a face-to-face industry, as much about making connections and building relationships as market insights and negotiating skills. Handshakes may have gone by the wayside for the time being, but when in-person meetings are required, the widespread use of personal protective equipment by realtors and their clients is expected to continue.
The World Health Organization recommends the use of masks to slow the transmission of the virus, particularly by those who may not know that they are infected. In order to enhance the safety of our agents as they continue to serve their clients through COVID-19, RE/MAX offices in Ontario and Atlantic Canada are being provided with reusable, RE/MAX-branded face masks for each agent. Additional RE/MASKS are available for order by agents who’d like to distribute them to their clients as well.
Since real estate offices were deemed an essential service by the Province of Ontario, RE/MAX offices have already employed many precautionary measures that are likely to continue, including:
Limiting contact with the general public and using alternate means of communication such as text, phone, email and video conference
Postponing all open houses until a future date that is deemed safe
Any agents that feel unwell are instructed to self-isolate and not interact with the public
Information around hand washing and sanitizing has been circulated with our agents and we are strongly encouraging them to follow all guidelines as outlined by public health officials to help keep themselves and their clients protected
Reduced hours at RE/MAX offices, and using alternative technologies to connect with clients, and host virtual home tours, digital presentations and offer presentations
Canadian Real Estate Price Trends
Many Canadian real estate markets kicked off 2020 in a seller’s market, primed for a busy spring season characterized by high demand and low housing inventory. Canadian real estate prices were on rise. Even as late as mid-March, Canada’s biggest housing markets were still seeing a flurry of activity. Toronto home sales were up 50 per cent year-over-year, while Vancouver reported a similar trend with high demand, multiple offers and steady sales.
Then, social distancing measures kicked in and activity dropped off, as many homebuyers and sellers put pause to their plans. Economic uncertainty and a dramatic change in how a transaction could even be completed during this unprecedented time put a big question mark on the Canadian real estate market.
The industry as a whole has been very resilient, with Realtors adopting new technologies and creative ways to transact safely. The big question now is, what will happen to Canadian real estate prices in the coming weeks and months? Real estate market conditions are local, and will be impacted differently depending on a number of unknowns, including:
How long will job losses and the ripple effects continue?
How long will it take for consumers to start spending again?
When will there be a vaccine for COVID-19?
Unemployment:
Statistics Canada reported the latest unemployment numbers, which soared to 13 per cent in April. While some of these layoffs are temporary, many businesses face permanent closures that will impact consumer activity and the housing market.
Financial Aid:
The federal and provincial governments have implemented a number of measures to help Canadians who have taken a financial hit. Mortgage deferrals are also being offered to existing homeowners who are struggling to make their mortgage payments. For those who are still looking to enter the market, the Bank of Canada has dropped its interest rate to a record-low 0.25 per cent, making this a good time for those who have job security and cash on hand for a down payment.
The actual impacts of COVID-19 on Canadian real estate remains to be seen. Until some of these questions are answered, many will continue to take a wait-and-see approach in they don’t have to buy or sell a home at this time.
A Return to the “New Normal”
Those who have been waiting for concrete dates will be disappointed, as there are still a lot of unknowns factoring into the Canadian real estate market. However, here’s a loose time frame of what a return to “the new normal” might look in the coming months:
The next 30 days will be a planning phase. Realtors and consumers alike are becoming more comfortable buying and selling homes, with some regions already reporting an upswing in activity week-over-week. The first quarter of 2020 showed great promise, and it’s encouraging to see activity continue as we move into the second quarter.
The next 60 days will see the fine-tuning the new process of buying and selling. As transactions begin to pick up again, real estate offices continue to comply with social distancing measures. RE/MAX agents have been leveraging technology when possible, and using personal protective equipment, hand sanitizer and other measures to remain compliant with government-mandated safety measures. The industry will continue to see this process refined.
The next 90 days could see business resume to 70 per cent activity, but in a different way. Real estate offices will have worked through the logistics of the new procedures and tools that evolved during the previous 60 days. Come September, we hope that businesses will have regained some sense of normalcy seen before the virus, but the transaction process will have changed with continued integration of virtual deals.
