As the novel coronavirus pandemic forces parts of the economy to shut down, the snow is melting in areas of Canada in what’s normally a prelude to the busiest weeks of the year in real estate.
But will the health emergency freeze the spring housing market?
So far, it’s hard to tell. Real estate is what economists call a “lagging indicator,” notes Romana King of Zolo.ca, meaning that, usually, it takes a while for economic trends to be reflected in housing market data.
“The numbers won’t show up for anywhere from a week to three months from now,” King said.
Still, there’s little doubt that COVID-19 has already brought about seismic changes in the industry.
Story continues below advertisement
1:03 Coronavirus outbreak: Trudeau says goal of stimulus is to help people no longer recieving income
Coronavirus outbreak: Trudeau says goal of stimulus is to help people no longer recieving income
In February, the housing market in many parts of Canada seemed headed for red-hot season. Home sales were up nearly 27 per cent compared to the same month in 2019 and the national average home price had climbed 15 per cent.
Now, real estate agents are doing client meetings and home tours online or carrying hand sanitizers and gloves when showing properties in person.
Still, despite the industry’s efforts, the biggest change King has noticed is “the hyper reluctance of buyers to go visit sellers’ home.”
Others, unnerved about the uncertainty over the economy, are pressing the pause button on home-purchasing, King said.
Story continues below advertisement
3:04 Will COVID-19 mean a shock for Montreal’s real estate market?
Will COVID-19 mean a shock for Montreal’s real estate market?
Others yet are seeing lenders press the pause button for them.
That’s what happened recently to a client of Ron Butler of Butler Mortgage, which offers services in the Greater Toronto Area, Ottawa, Vancouver and Calgary.
When the lender conducted a routine check on the person’s employment status two weeks before the closing date, it discovered the client, who works in the hotel sector, had been temporarily laid off with no set return date.
The mortgage was cancelled, Butler said.
Butler sounded optimistic about the possibility of finding a solution for his client — possible alternatives included finding a co-signer or signing up with a different lender willing to take on more risk for a high mortgage rate, he said.
Still, buyers who find themselves in that situation face the possibility of losing thousands of dollars in deposit, Butler said. And if the seller has to re-list the property and eventually sells for a lower price, the original buyer may be on the hook for the difference, although they may be able to challenge that through litigation, he added.
In the current circumstances, some lawyers will take the view that “a contract is a contract — until there’s a plague,” Butler said.
1:42 Why Canadians should care about money laundering in real-estate
Why Canadians should care about money laundering in real-estate
For now, since the virus hit, Butler has had only one case of a lender pulling out. Nor has he seen prospective buyers getting gold feet as the closing date approaches, he said. But that may change.
The bulk of the layoffs in the hotel and restaurant industries have only come over the past two or three weeks, while home deals, on average, take 48 days to close, said Butler.
“The next three weeks are going to be the great run of insanity.”
Tweet This
The news this week doesn’t bode well. Air Canada is set to temporarily lay off more than 5,000 employees, according to the union representing the airline’s flight attendants. And on Friday Ottawa said over half a million Canadians have recently filed for employment insurance, a volume Prime Minister Justin Trudeau called “historic.”
Still, the market hasn’t dried out yet, King said.
Story continues below advertisement
Even before COVID-19, virtual tours were becoming more and more popular. Some buyers are comfortable purchasing without seeing properties in person. Others, who have plenty of cash at hand, are undeterred by the economic outlook, she said.
No doubt, low mortgage rates are helping.
Well-qualified buyers can now get a five-year fixed rate for below 2.5 per cent and variable rates below two per cent.
9:50 Coronavirus outbreak: A timeline of how COVID-19 spread around world
Coronavirus outbreak: A timeline of how COVID-19 spread around world
But mortgage rates have been climbing somewhat, noted Robert McLister, a mortgage broker and founder of rates-comparisons site RateSpy.com. For weeks, a slowing global economy pushed borrowing costs lower. But now that Canada’s economy is staring down the barrel of a recession, banks are facing both higher funding costs from jittery investors who help fund their mortgages and a higher likelihood of loan losses as borrowers struggle to keep up with payments.
“Both funding costs and credit risk (expected losses) have surged. When that happens, banks protect their profitability and increase margins by lifting rates,” McLister said via email.
Some lenders are lifting variable mortgage rates even after the Bank of Canada lowered its trend-setting policy rate by one percentage point in the span of less than two weeks.
Banks can’t lower the interest they pay on deposits as much as mortgage rates, McLister said. This squeezes their margins and creates upward pressure on mortgage rates.
Story continues below advertisement
That should stop when people get back to work and mortgage arrears have topped out, McLister said.
How soon that actually happens will be key in determining whether the housing market is headed for a temporary blip or something more serious, King said.
“We talk about interest rates and we talk about supply and demand levels,” King said. “But the primary indicator when we talk about real estate is job security.”
EDMONTON – RCMP say a second suspect has been arrested in the killing of an Alberta county worker.
Mounties say 28-year-old Elijah Strawberry was taken into custody Friday at a house on O’Chiese First Nation.
Colin Hough, a worker with Rocky View County, was shot and killed while on the job on a rural road east of Calgary on Aug. 6.
Another man who worked for Fortis Alberta was shot and wounded, and RCMP said the suspects fled in a Rocky View County work truck.
Police later arrested Arthur Wayne Penner, 35, and charged him with first-degree murder and attempted murder, and a warrant was issued for Strawberry’s arrest.
RCMP also said there was a $10,000 reward for information leading to the arrest of Strawberry, describing him as armed and dangerous.
Chief Supt. Roberta McKale, told a news conference in Edmonton that officers had received tips and information over the last few weeks.
“I don’t know of many members that when were stopped, fuelling up our vehicles, we weren’t keeping an eye out, looking for him,” she said.
But officers had been investigating other cases when they found Strawberry.
“Our investigators were in O’Chiese First Nation at a residence on another matter and the major crimes unit was there working another file and ended up locating him hiding in the residence,” McKale said.
While an investigation is still underway, RCMP say they’re confident both suspects in the case are in police custody.
This report by The Canadian Press was first published Sept. 13, 2024.
RICHMOND, B.C. – The Integrated Homicide Investigation Team says the 26-year-old son of a man found dead on British Columbia’s Sunshine Coast has been charged with his murder.
Police say 58-year-old Henry Doyle was found badly injured on a forest service road in Egmont last September and died of his injuries.
The homicide team took over when the BC Coroners Service said the man’s death was suspicious.
It says in a statement that the BC Prosecution Service has approved one count of first-degree murder against the man’s son, Jackson Doyle.
Police say the accused will remain in custody until at least his next court appearance.
The homicide team says investigators remained committed to solving the case with the help of the community of Egmont, the RCMP on the Sunshine Coast and in Richmond, and the Vancouver Police Department.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, have broken off without an agreement following 15 hours of talks.
Joe McCann, president of Amalgamated Transit Union Local 1724, says they stayed at the bargaining table with help from a mediator until 2 a.m. Friday and made “some progress.”
However, he says the union negotiators didn’t get an offer that they could recommend to the membership.
McCann says that in some ways they are close to an agreement, but in other areas they are “miles apart.”
About 600 employees of the door-to-door transit service for people who can’t navigate the conventional transit system have been on strike since last week, pausing service for all but essential medical trips.
McCann asks HandyDART users to be “patient,” since they are trying to get not only a fair contract for workers but also a better service for customers.
He says it’s unclear when the talks will resume, but he hopes next week at the latest.
The employer, Transdev, didn’t reply to an interview request before publication.
This report by The Canadian Press was first published Sept. 13, 2024.
