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<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Commercial real estate investments will fare well in the face of the coronavirus, which has sent equity markets plummeting to record lows.” data-reactid=”15″>Commercial real estate investments will fare well in the face of the coronavirus, which has sent equity markets plummeting to record lows.
Fears over the coronavirus will cause a short-term slowdown in commercial real estate transactions, but investments in office, retail and warehouse properties will be more resilient than other asset classes, say experts.
Compared to other industries, like tech, commercial real estate investments will “hold up relatively well,” said Heidi Learner, chief economist at Savills, a global real estate services provider based in London, adding that real estate is less reactive to market conditions.
“It’s not something that’s going to be disrupted by intermediate products or lack of manufacturing capability in Asia,” said Learner. She noted that there is still demand for data centers even considering the virus’s impact on Microsoft and Apple’s supply chains.
Additionally, “it’s a little bit too early to see valuations be affected, but I would be shocked if we didn’t see a decrease in transaction volume,” said Learner.
Some Chinese investors are trying to finish existing deals virtually, according to experts, but new transactions will likely be delayed to the second half of 2020, assuming travel bans and quarantines lift, according to Learner.
“New commercial transactions will likely decline because of the preference of Chinese investors to visit a property in person at least once before a deal closes,” said Jacky He, CEO of DMG Investments, the U.S. subsidiary of DoThink Group, a Hangzhou, China-based developer.
Prices would only be impacted if the virus became a more “pronounced problem,” forcing investors to sell their real estate holdings, said Learner.
“It’s largely going to be a short-term reaction. I think if you think of real estate as a long-term asset, losing income… for the next six months shouldn’t really affect long-term valuations,” said Learner.
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What’s Next for the Real Estate Industry?
The real estate industry has never been static, but things have changed here more than normal on several fronts. The skyrocketing cost of housing is not the only major difference.
As technology evolves, disruptors are leveraging platforms to help people make more informed purchasing decisions. They’re also removing pain points along the journey, so buying a home doesn’t have to be a murky, slow, and excruciating process.
Let’s check out some of the technology in today’s real estate market.
Innovators like Regan McGee have made open digital marketplaces where homebuyers, especially millennials, can enjoy transparent data working for them. Compare qualified and verified local real estate agents based on their pricing, service, reputation, and experience level. Then, pick the agent who works best for you.
On a platform where agents vie with each other for your business, prospective homebuyers get further incentives like cashback or improved services, which are likely to be very appreciated given housing costs. As McGee explained to Toronto Life, “People think buying and selling real estate is complicated, but that’s a way for agents to justify their fees.”
Prop tech helps people entering the housing market for the first time learn what questions to ask so they don’t find out hard lessons after it’s too late. Homebuying doesn’t have to be a nerve-wracking, drawn-out process if you rely on today’s leading technological support.
Virtual Reality and Augmented Reality
While the development of virtual reality tech predates the COVID-19 pandemic, the need for remotely viewing property was only made more acute. Pictures and even videos of the property up for sale don’t give prospective buyers granular control over what they’re viewing.
Exploring a property using virtual reality lets you delve deeper into the home itself. Imagine looking at a picture of a home and wondering what’s around a certain corner you can’t see. Virtual reality lets you step inside the pictures and even the video and roam freely.
Facebook, now known as Meta, has people spending fortunes buying a virtual property you can’t actually live inside.
Airbnb was originally meant to allow homeowners to rent out their space while they were away on vacation or for whatever other reason. In the years since, people have purchased property for the sole purpose of renting it out short-term on Airbnb.
Such practices have driven up the cost of living, and not every community is supportive. Local battles between long-time community members who resent living in ghost towns and short-term landlords who aren’t breaking any laws are increasingly common.
Each jurisdiction responds differently, but technology has created possibilities that didn’t exist even a few years ago, and that is definitely something to watch.
Technology has evolved so much in the past decade or so that it’s hard to think of a sector it hasn’t affected. From prop-tech platforms, developments in augmented and virtual reality, and apps that increase your property’s value, real estate is presently different than ever. In a way, the future of real estate is now.
Canada real estate: When the appraisal falls short – CTV News
The red-hot housing market over the last several months pushed many buyers fighting through bidding wars to put in unconditional offers at high prices.
But now that the market is cooling, some are ending up with mortgages that can’t cover the full cost of their home following an appraisal.
Toronto-based mortgage broker Mary Sialtsis says there are “very few options” for these buyers.
“In the last couple of years, but especially in the last couple of months, I’ve had a few different clients that have dealt with this situation,” she told CTV’s Your Morning on Friday. “Unfortunately, there are very few options when you’ve purchased a property with no conditions and no financing conditions.”
Nationally, home prices fell 6.26 per cent between March and April 2022 after peaking in February, according to the Canadian Real Estate Association. That’s meant some buyers are ending up with mortgages that are more than $100,000 shy of what they need.
In some cases, especially when the down payment from the buy is 50 per cent more, Sialtsis says the lender may just move forward with the mortgage based on the original price of the home, even if the appraisal is a lot lower.
“It’s a case-by-case situation,” she said.
Another option may be to get a second mortgage from a private or alternative lender. But if no other option works, buyers can try and negotiate a mutual release, which usually means forfeiting the deposit.
“For most, they end up going to the bank of mum and dad,” said Sialtsis. “I highly recommend if anyone is in this situation, reach out to your mortgage professional immediately.”
Sialtsis warns that putting in offers without any financing conditions puts buyers at a huge risk, as the buyer is legally bound to close the deal regardless of whether they’re able to get a sufficient mortgage.
“I really don’t think buyers fully understand the impact of those unconditional offers when they submit an offer to purchase a property,” she said. “It becomes a legally binding contract and that buyer is expected to close on the closing date. So, that’s one of the reasons why there’s very few options for this.”
But the cooling housing market isn’t all bad news. For those looking to buy a home, Sialtsis says now is a good time to jump in as buyers have a lot more leverage to negotiate.
“For many Toronto-area buyers, where often we’re dealing with multiple offers… it might be a good chance for you to get in and get a decent property with less competition or no competition and the opportunity to actually include a financing condition,” she said.
Edmonton real estate resales fall after months of high demand – Edmonton Journal
Edmonton real estate sales are falling — at least from the all-time highs set earlier this year.
April saw 2,919 resales in the Greater Edmonton Area, down almost 11 per cent from March, based on the latest statistics from Realtors Association of Edmonton.
Still, sales last month were up, year over year, by two per cent from the previous April.
The moderation in pace from the all-time record set in March with 3,283 sales is not surprising, says Paul Gravelle, chair of RAE.
“You can only keep breaking records for so long,” Gravelle says. “We’re starting to see the market cool with spring inventory rising, leading to more balance between supply and demand.”
April saw new listings grow by almost nine per cent from the same month last year and expand by nearly 12 per cent from March to more than 4,700.
Prices continued to climb, however, with the average price rising by seven per cent in April over the same month last year to about $417,000. Yet the average price only gained about one per cent from March, reflecting better conditions for buyers who have faced continually tight supply, particularly among affordable price ranges for single-family detached homes, Gravelle says.
“Supply in the $300,000 to $400,000 range still remains tight, but the higher end of the market has slowed down a little bit,” he says.
Continuing high demand pushed prices for single-family detached homes more than 11 per cent higher to $510,988 last month compared with April 2021. The city and surrounding area saw 1,704 sales for single-family detached homes in April.
That tally is actually down by more than six per cent from last year, likely reflecting reduced selection among more affordable ranges, Gravelle notes.
In contrast, sales grew in the row/semi-detached and apartment segments last month, along with price gains.
Duplex/row sales were up slightly, year over year, by about two per cent with the average price hitting almost $409,000, an increase of about 17 per cent.
Apartment condominiums saw the fastest pace of sales increases, growing by 27 per cent, year over year. In turn, the average price reached about $237,000 in April. That’s up about three per cent from the same month last year.
“There is still a significant amount of inventory for condos, so buyers still have options,” says local realtor Bev Hasinoff with Liv Real Estate.
While sales and prices are picking up for the segment, it has still not fully recovered like the single-family detached homes, she adds.
The busiest segment of the market continues to be single-family detached homes in the $400,000 to $500,000 range, especially in surrounding communities like Sherwood Park and St. Albert. Yet Hasinoff sees demand even easing slightly in the hottest corners of the market.
“Right now, we are still in a sellers’ market, but the frenzied pace is slowing,” she says.
Furthermore, moderating demand is not a bad sign overall for the market, Gravelle says.
“It’s great that home prices jump up, but it’s only truly beneficial for people selling and not buying a home.” Otherwise, sellers still need to buy a home, facing tight supply and rising prices, he explains.
While the pace of sales is expected to moderate further, the remainder of the busy spring market is likely to stay strong by historical norms, Gravelle predicts.
“But with the amount of inventory coming on, it’s likely buyers will not be facing multiple bids as often as in recent months.”
What’s Next for the Real Estate Industry?
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