The COVID-19 pandemic is affecting business in each and every sector of the economy and, indeed, all areas of life itself. Real estate is no exception. As agents, buyers and sellers look to gauge the likely short and long term market effects, they must also find new ways of conducting daily business. What is the state of the current market? What will tomorrow bring? How can we function today? With the ground beneath our feet shifting constantly, we examine the current situation.
Strong Current Real Estate Markets
“While retail is going through a transformative period due to changes in shopping habits and demographic trends, Canada’s office, industrial and multi-family residential rental markets have registered near-record low vacancy levels and near-record high rental rate averages,” writes Steve McLean for Real Estate News Exchange.1
Both residential and commercial markets have been strong throughout much of Canada leading up to the crisis. According to the Real Estate Board of Greater Vancouver, 2,150 homes were sold in the area during February of this year, representing a 44.9% increase over the same month in 2019. January’s numbers were also strong.2
Reports out of Ottawa also indicate that the early days of the COVID crisis have not yet dampened the city’s real estate boom. However, despite a flurry of recent activity in the area, Bill Meyer, owner of real estate firm Home Team Ottawa cautions that this could be the storm before the calm.
“This market is strong because some people still have to sell,” says Meyer. “They’re changing jobs or they’ve already bought a house and need to sell to pay for it. This could all come to a screeching halt. I can’t imagine people listing their homes in this (COVID-19) environment unless they have to.”3
Possible Effects of Looming Recession on Real Estate Markets
The reality, of course, is that nobody, at present, completely understands the long term ramifications that this crisis will hold for the economy as a whole. With stock markets in rapid decline and danger looming for various industries, many believe we are destined for a substantial economic downturn.
“Should the crisis last for an extended period, some organizations may be forced to adjust to the new economic reality by downsizing, which could potentially lead to reductions in staffing and real estate demand,” warns Keith Reading, research director for Morguard, an integrated real estate company.1
Silver Linings?
One piece of seemingly good news for the real estate market is the slashing of already low interest rates. Despite this, however, advertised rates for mortgages have actually increased.4 People will be fixing a keen eye on this situation to see how market and government forces influence what comes next.
Another reason for cautious optimism is the relative stability of real estate during times of economic uncertainty. With stock markets in flux, some investors look to commercial real estate as a more attractive place to park money.1
“I think people naturally look to housing as an investment. It’s what we call a tangible asset,” says Sean Morrison, president of the Ontario Real Estate Association. 5
Day to Day Business, Cancelled Open Houses
Notwithstanding the long term ramifications of COVID-19, real estate agents, like the population at large, are looking for ways to conduct day to day business during this era of ‘social distancing’.
Open houses, a pivotal part of the selling strategy, suddenly seem so 2019. The Ontario Real Estate Association has asked realtors to halt holding the events.
“I am calling on all realtors to cease holding open houses during this crisis and advise their clients to cancel any that are planned,” said Sean Morrison.5
Such industry specific action is likely to become a moot point as new regulations unfold at the provincial and federal levels on a day to day basis.
For the time being, individual showings remain an option, although increased caution is advised. Hand sanitizers should be available on site, and disinfectant wipes should be utilized liberally throughout the space. Doors should be left open to avoid the unnecessary touching of doorknobs.
Perhaps a better option is a virtual tour. While buyers are not likely to sign on the dotted line sight unseen, 360 tours, panoramic pictures and a wealth of online information make it possible to do the vast majority of pre-screening remotely. Even signatures can be obtained electronically, further limiting the necessity of person to person contact.
Agents, for their part, are doing a great deal of their work from home offices, making use of video chats. Those who must visit the office are doing so during staggered hours, while practicing social distancing when co-workers are present.
With all of this digital infrastructure in place, real estate agents are well positioned to continue their work during this tumultuous period. Agents, though, are often highly social creatures and nothing can duplicate an actual walk through. For these reasons, agents, buyers and sellers will look forward to an eventual return to relative normalcy.