Illustration of a coronavirus, created for the Centers for Disease Control in the U.S. A novel coronavirus is being blamed for the COVID-19 outbreak. (Courtesy Alissa Eckert, MS; Dan Higgins, MAMS / CDC)
COVID-19 (novel coronavirus) hasn’t yet put a major dent in the Canadian commercial real estate or housing markets, but a great deal of uncertainty remains surrounding the potential impact of the global outbreak.
“We are already beginning to see the impact of the virus with international buyers,” Sotheby’s International Realty real estate agent Paul Maranger told RENX. “Air Canada recently cancelled direct flights between Toronto and Hong Kong. With cancelled flights from Asia, and a possibility of even more to come, foreign buyers aren’t coming to look at properties.”
Sotheby’s agent Christian Vermast told RENX buyers hold back on real estate decisions in times of volatility and purchases are delayed.
“We expect a much more robust summer and fall market in 2020 and perhaps a quieter spring than originally forecasted,” he said.
Compared to such countries as China, South Korea, Iran and Italy, Canada has so far been relatively unscathed by COVID-19. Flu season traditionally ends in May and, assuming the situation stabilizes by then, Maranger is optimistic pent-up demand will burst into the housing market.
“We also have the advantage in terms of a great international reputation,” added Maranger. “Our vast forests, lakes and countryside give the impression of purity and freshness. In this case, those stereotypes can well work in our favour and help us sell more real estate.”
While Sotheby’s specializes in residential real estate, Vermast expects the commercial aspect of the market “will be hit harder and faster.
“People will avoid social gatherings and large groups. Hence businesses, such as restaurants and retailers, looking to expand may put that on the back burner until 2021,” he said.
“Those are pure investment decisions and are the first to suffer, whereas residential real estate decisions, which are more emotional, don’t experience the same shocks.”
Cushman & Wakefield report
Cushman & Wakefield in the United States issued a report on COVID-19’s effect on global property markets.
It said it is premature to draw strong inferences about the virus’ impact, but noted the commercial real estate sector is slower moving than the stock market and that leasing fundamentals don’t swing wildly from day to day.
So, it is less susceptible to shocks such as Monday’s global market downturn – fueled jointly by COVID-19 concerns and a global oil price dispute between Russia and Saudia Arabia-led OPEC nations.
The first quarter of the year is typically the weakest for commercial real estate metrics, so drawing conclusions about the impact of COVID-19 must be done carefully.
The report from the global real estate services firm said the recent lowering of already low interest rates should support consumer activity, which may result in increased momentum across the residential sectors in Canada.
“Demand for owner-occupied industrial product is also likely to accelerate against this backdrop, with any pause in office and/or leasing activity temporary,” the report stated. “As in other global regions, hospitality and retail sectors are dependent on Chinese tourism and/or supply chains, and so are liable to experience near-term disruption.”
The report said the COVID-19 outbreak will likely affect the North American retail supply chain as early as April, mostly due to slowing imports from China.
Retailers with shorter lead-time replenishment models could be among the first to experience supply issues. Dollar stores, consumer electronics, toys and the apparel categories all face potential disruption in the supply chain if the crisis drags on, according to the report.
While the industrial real estate sector is expected to remain largely resilient, certain types of manufacturers disproportionately dependent on Chinese production for inputs and final goods could also be adversely affected by supply chain disruptions.
Precautions being taken
Precautions are being taken in the real estate community to prevent the potential spread of COVID-19 through company guidelines.
“Open houses may be cancelled or curtailed, brokerages will likely introduce policies for hygiene and face-to-face meetings, and group office meetings could be reduced,” said Vermast.
“Fortunately for us, our industry is more mobile and adaptable than many other professions. Many realtors can easily work from home and be equally as productive as they are in the office.”
REALPAC response to COVID-19
REALPAC chief executive officer Michael Brooks issued a statement to members on March 6 that included links to resources and information on COVID-19.
While stressing the Public Health Agency of Canada has assessed the domestic public health risk associated with the virus as low, he said:
“As business and property owners, it is also important that our members are aware of how their organizations should be responding to COVID-19. Organizations will need to consider the possibility of limiting or prohibiting work travel, cancelling events, and allowing employees to work remotely.”
Brooks said REALPAC will continue to monitor the COVID-19 pandemic and keep members informed of new information and resources that become available.
Effect on real estate events
One of the most visible effects of the virus is the postponement of Informa Canada’s Vancouver Real Estate Forum and Western Canada Apartment Investment Conference.
The Vancouver forum will now take place at the Vancouver Convention Centre on Sept. 30. WCAIC will take place in an alternate format, but Informa has yet to release any details.
Informa is also restricting registrations for the two Vancouver conferences, as well as other Canadian Real Estate Forums and Conferences, to residents of North America.
Other regional events are also being impacted, including the Ottawa market outlook event hosted annually by CBRE. It has been postponed from its original date of March 26.
The commercial real estate services firm cited an “abundance of caution” for the move last week. There’s been no word yet on when it might be rescheduled.
COVID-19 and SARS
At this point in Canada, COVID-19 hasn’t reached the scale of the 2003 SARS outbreak, though health officials across the country are warning the situation could escalate. The number of confirmed COVID-19 cases as of March 9 was 77, in four provinces
There were 438 probable and reported cases and 44 deaths in Canada due to SARS.
Maranger said SARS had a short-lived impact on the real estate market and there was no precipitous drop in sales.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
