Canadians across the country are grappling with a new normal amid social distancing measures imposed to protect the population against the spread of the aggressively contagious COVID-19 pandemic. These directives came from Canada’s chief public health officer, Dr. Theresa Tam, and involves taking steps to minimize all close contact (maintaining a distance of 6ft) with community members, and avoiding crowds or mass gatherings.
As well as dramatically shifting our daily routines and lifestyles, these measures have also impacted virtually every industry, including Real Estate. While deemed an “essential service”, the buying and selling of real estate has continued, albeit with dramatic differences. Below we explore the ways in which the practice of social distancing has impacted the Canadian Real Estate Market, and whether these changes will be lasting.
New Marketing Methods for Properties
Typically, the process of showcasing a property involves a substantial amount of in-person, face to face interaction. Amid social distancing guidelines, the home marketing process has inevitably undergone some changes, to ensure that transactions are kept as safe as possible for buyers, sellers, and real estate agents.
By mid-March, most Real Estate Boards and Councils across the country had posted messages strongly urging members to cease open houses. By this point, many agents had already started to make use innovative methods of showing their listed properties, including virtual 360-degree interactive tours, as well live video tours which allow watching buyers the opportunity to ask questions about features or specs.
Unfortunately, even with the use of these creative tools, Real Estate Agents often still have to appease buyers who insist on viewing their property in person before purchasing. Agents are accordingly establishing their own principled guidelines during this time, agreeing to only show homes to buyers who are truly in need, rather than those just looking to take advantage the cooler market conditions.
For these tours that must take place, agents are taking extraordinary measures to ensure the safety of everyone involved. For many, this includes:
- Arriving to the property in their own respective vehicles.
- Leaving children at home.
- Enacting a “touch-free” policy for clients, allowing agents to take sole responsibility for touching any light switches or door handles.
- Avoiding elevators where possible, using stairways where distancing is easier.
- And, of course, using hand sanitizer and disinfectant wipes liberally, and often.
Over the span of only a few months, the real estate industry across Canada has slowly swapped deal-sealing handshakes for video-calls and a touchless personal touch!
Declining Sales Activity
It’s not surprising that social distancing advisories have led to buyers and sellers pulling out of the market entirely, hoping to wait out the public health crisis. Many buyers have been heading the advice to “just stay home”, pushing their home search off their priority list, and accordingly, sellers who are hoping to make the most off their home, are wary to list their properties within a market experiencing cooling demand.
Within some of the hottest real estate markets in the country, sales activity was in fact up in the first half of March. This is likely a result of desperate buyers and sellers rushing in to make sales while they could. In Toronto, sales were up a whopping 50% for the first two weeks of March, compared to this same period last year.
The second half of the month, however, showed a stark contrast. As the pandemic gained momentum, the real estate market finally showed signs of the impact of buyers and sellers pumping the breaks and adhering to social distancing measures. By the third week of March, sales activity in Toronto was down 37% compared with last year, with a 33% drop in new listings.
In Canada’s west coast real estate market, the impact of social distancing measures are also projected to be deep. A market intelligence report released on April 20th by the B.C. Real Estate Association is forecasting a 30-40% dip in home sales for this month, and expects these depressed rates to remain over the course of the summer.
A Strong Rebound
The good news is, the impacts of social distancing on the national real estate market, and the economy at large, are just temporary. As these measures are slowly lifted across the country, markets will again adjust, and to the relief of many, the bounce-back is expected to be pronounced within the country’s hottest markets.
With many of these markets characterized by low levels of inventory outweighed by strong demand, many experts are confident that this pent-up demand will serve as the fuel to re-ignite buyer levels post-crisis.
In a recent report from the BCREA, the impact of previous recessions upon the housing market is assessed and compared, and it is suggested that the impact of any COVID-19-related economic downturns will not be as pronounced.
Within the BC market, the Association is predicting that by early 2021, home sales will have already returned to a baseline 85,000-unit annual pace. This will also be driven, in part, by low interest rates.
This optimism is echoed within Toronto’s Real Estate Market. In a mid-April market update released by the Toronto Regional Real Estate Board (TRREB), Jason Mercer, TRREB’s Chief Market Analyst predicts that as the city recovers from the economic scars of this crisis later this year, home buyers will return from the side-lines in increasing numbers. “Increasingly, these buyers will be faced with the persistent lack of listings inventory that was a serious problem before the onset of COVID-19”, says Mercer. This imbalance will serve to quickly re-bound any drops in average price that took place over the COVID-19 period.
Signs of Improvement
In some regions, signs of a gradual re-bound have already begun to surface. Across Ontario, where both prices and sales volumes have been down since social distancing measures began, there were already signs of improvement in the third week of April. ShowingTime, a real estate market statistics provider, reported that showing activity within the province plunged to its lowest weekly average of the year on March 30th to -65.7%. By April 27th, however, the weekly average was up to -42.2%, showing a 25% improvement.
While seemingly slight, this modest increase brings much optimism that buyers and sellers are still participating in the market. Activity is only primed to accelerate as the Ontario Government has announced the gradual re-opening of businesses and workplaces over the course of May.