Real estate stocks tumbled as coronavirus fears sent markets into a tailspin. (Credit: iStock)
UPDATED, Friday, Feb. 28, 2020, 6:15 p.m.: As coronavirus fears shook markets and led to the steepest stock drop in over a decade this week, usually safe real estate investment trusts tumbled.
“We’ve seen massive drawdowns across the entire equity market, and massive panic and sell-offs,” said Alexi Panagiotakopoulos, co-founder of Fundamental Income, sponsor of the NETLease Corporate Real Estate ETF.
The stock market’s three major indices over the past five days saw their worst performances since the Great Recession. As of market close Friday, the S&P was down about 11.5 percent for the week, according to S&P Global Market Intelligence.
Meanwhile, the SNL U.S. REIT Equity index had fallen about 12.3 percent for the week, according to S&P. On Friday alone, the index fell about 2.5 percent.
The sell-off started Monday and accelerated to include publicly traded REITs, which typically are viewed as defensive investments in the wake of periods of short volatility. Those REITs tend to pay higher-than-average dividends and have a relatively durable source of cash flow — even if tenants were to take financial hits from people staying home because of the virus.
“It’s not like the corporations can stop paying their rent,” Panagiotakopoulos said.
Meanwhile, other real estate firms also struggled Friday: Reology, which reported earnings earlier this week, closed down 4.43 percent. ReMax saw its stock price dip 0.85 percent.
At the start of the week, REITs posted losses — but not as sharp as the rest of the market. In the days that followed, though, their losses overtook the broader market.
The drops come after a strong year for REITs, which posted nearly 29 percent total returns in 2019. That was just below the S&P 500’s nearly 32 percent total return, according to S&P Global Market Intelligence.
Fed Reserve response
This week, the U.S. saw its first case of community transmission of the virus — or contagion of unknown origin — which was reported in California. The news, along with signs of growing outbreaks in countries far from where it started in mainland China, triggered business and recreational travel to slow.
On Friday, the Federal Reserve issued a statement about the impact of the virus, which has infected over 80,000 people in 35 countries and has led to 2,800 deaths, according to reports.
In the statement, Federal Reserve Chairman Jerome Powell said the fundamentals of the U.S. economy are strong, “but the coronavirus poses evolving risks to economic activity.” The statement followed comments by other central bankers who signaled that more interest rate cuts may be needed to stave off the economic impacts of the epidemic, according to the New York Times.
“Falling interest rates should provide some support as well for the market,” said Todd Kellenberger, REIT client portfolio manager at Principal Global Investors. “But right now it feels as though anything that’s an equity is being sold.”
Meanwhile, the losses in the REIT world this week in response to the virus are “uncharacteristic,” Panagiotakopoulos said. They are based on market perception, he said. “The perception of bankruptcies, the perception of corporate credit risk. But not everything is 100-percent correlated.”
Also, he noted, not all REITs are created equal.
“In times like this, everything draws down, and it creates mispricing,” Panagiotakopoulos said.
Hits to hotels
Hotels have been hit particularly hard, as they are highly sensitive to market volatility because they charge by the night and because the virus has hampered travel. Hotel REITs’ prices fell 18.4 percent this week, per S&P.
Arne Sorenson, CEO of Marriott International, tried to calm analysts and investors in an earnings call Thursday, saying the impact of the coronavirus was temporary.
“This will pass,” he said. “And when it does, the impact to our business will quickly fade.”
But the short-term impact is staggering. The company reported that this month its revenue per available room at its hotels in China plunged almost 90 percent from the year before.
Meanwhile, the best-performing sector in the REIT space has been self-storage, a sector that posted losses of 7.5 percent for the week, according to S&P.
That’s because it’s still earnings season, and self-storage — now facing headwinds of oversupply in the sector — had largely done better than expected in the fourth quarter, said Todd Kellenberger, REIT client portfolio manager at Principal Global Investors.
Another real estate segment that could get slammed is the already ailing mall sector.
Shopping centers rank third among the public places that people said they are avoiding — after international travel and public transportation — amid the coronavirus outbreak, according to a survey released Friday by retail research firm Coresight Research. Nearly a third of respondents said they already are staying clear of public places, whether that’s shopping centers or even their workplaces.
In an earnings call this month, David Simon, CEO of mall owner Simon Property Group, noted the company’s revenues could be hurt in the short-term from a drop in tourism related to the outbreak.
“And assuming we get through this coronavirus scenario, we expect our overage to continue to be dominant or at growth in our outlet business,” he said.
Still, if the sell-off in the REIT space continues at the same level as other equities, it could present an opportunity for investors, Kellenberger said.
“The impact to fundamentals and earnings is going to be less in that of REITs than it would be for most other areas of equity markets,” he said.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
