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COVID-19 having minimal impact on real estate market – so far | RENX – Real Estate News EXchange

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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 referred to BOMA Canada’s 2019 Guide to Pandemic Planning as a tool for property owners and managers to ready them for pandemics.

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.

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Here are some facts about British Columbia’s housing market

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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.

The Canadian Press. All rights reserved.

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B.C. voters face atmospheric river with heavy rain, high winds on election day

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VANCOUVER – Voters along the south coast of British Columbia who have not cast their ballots yet will have to contend with heavy rain and high winds from an incoming atmospheric river weather system on election day.

Environment Canada says the weather system will bring prolonged heavy rain to Metro Vancouver, the Sunshine Coast, Fraser Valley, Howe Sound, Whistler and Vancouver Island starting Friday.

The agency says strong winds with gusts up to 80 kilometres an hour will also develop on Saturday — the day thousands are expected to go to the polls across B.C. — in parts of Vancouver Island and Metro Vancouver.

Wednesday was the last day for advance voting, which started on Oct. 10.

More than 180,000 voters cast their votes Wednesday — the most ever on an advance voting day in B.C., beating the record set just days earlier on Oct. 10 of more than 170,000 votes.

Environment Canada says voters in the area of the atmospheric river can expect around 70 millimetres of precipitation generally and up to 100 millimetres along the coastal mountains, while parts of Vancouver Island could see as much as 200 millimetres of rainfall for the weekend.

An atmospheric river system in November 2021 created severe flooding and landslides that at one point severed most rail links between Vancouver’s port and the rest of Canada while inundating communities in the Fraser Valley and B.C. Interior.

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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No shortage when it comes to B.C. housing policies, as Eby, Rustad offer clear choice

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British Columbia voters face no shortage of policies when it comes to tackling the province’s housing woes in the run-up to Saturday’s election, with a clear choice for the next government’s approach.

David Eby’s New Democrats say the housing market on its own will not deliver the homes people need, while B.C. Conservative Leader John Rustad saysgovernment is part of the problem and B.C. needs to “unleash” the potential of the private sector.

But Andy Yan, director of the City Program at Simon Fraser University, said the “punchline” was that neither would have a hand in regulating interest rates, the “giant X-factor” in housing affordability.

“The one policy that controls it all just happens to be a policy that the province, whoever wins, has absolutely no control over,” said Yan, who made a name for himself scrutinizing B.C.’s chronic affordability problems.

Some metrics have shown those problems easing, with Eby pointing to what he said was a seven per cent drop in rent prices in Vancouver.

But Statistics Canada says 2021 census data shows that 25.5 per cent of B.C. households were paying at least 30 per cent of their income on shelter costs, the worst for any province or territory.

Yan said government had “access to a few levers” aimed at boosting housing affordability, and Eby has been pulling several.

Yet a host of other factors are at play, rates in particular, Yan said.

“This is what makes housing so frustrating, right? It takes time. It takes decades through which solutions and policies play out,” Yan said.

Rustad, meanwhile, is running on a “deregulation” platform.

He has pledged to scrap key NDP housing initiatives, including the speculation and vacancy tax, restrictions on short-term rentals,and legislation aimed at boosting small-scale density in single-family neighbourhoods.

Green Leader Sonia Furstenau, meanwhile, says “commodification” of housing by large investors is a major factor driving up costs, and her party would prioritize people most vulnerable in the housing market.

Yan said it was too soon to fully assess the impact of the NDP government’s housing measures, but there was a risk housing challenges could get worse if certain safeguards were removed, such as policies that preserve existing rental homes.

If interest rates were to drop, spurring a surge of redevelopment, Yan said the new homes with higher rents could wipe the older, cheaper units off the map.

“There is this element of change and redevelopment that needs to occur as a city grows, yet the loss of that stock is part of really, the ongoing challenges,” Yan said.

Given the external forces buffeting the housing market, Yan said the question before voters this month was more about “narrative” than numbers.

“Who do you believe will deliver a better tomorrow?”

Yan said the market has limits, and governments play an important role in providing safeguards for those most vulnerable.

The market “won’t by itself deal with their housing needs,” Yan said, especially given what he described as B.C.’s “30-year deficit of non-market housing.”

IS HOUSING THE ‘GOVERNMENT’S JOB’?

Craig Jones, associate director of the Housing Research Collaborative at the University of British Columbia, echoed Yan, saying people are in “housing distress” and in urgent need of help in the form of social or non-market housing.

“The amount of housing that it’s going to take through straight-up supply to arrive at affordability, it’s more than the system can actually produce,” he said.

Among the three leaders, Yan said it was Furstenau who had focused on the role of the “financialization” of housing, or large investors using housing for profit.

“It really squeezes renters,” he said of the trend. “It captures those units that would ordinarily become affordable and moves (them) into an investment product.”

The Greens’ platform includes a pledge to advocate for federal legislation banning the sale of residential units toreal estate investment trusts, known as REITs.

The party has also proposed a two per cent tax on homes valued at $3 million or higher, while committing $1.5 billion to build 26,000 non-market units each year.

Eby’s NDP government has enacted a suite of policies aimed at speeding up the development and availability of middle-income housing and affordable rentals.

They include the Rental Protection Fund, which Jones described as a “cutting-edge” policy. The $500-million fund enables non-profit organizations to purchase and manage existing rental buildings with the goal of preserving their affordability.

Another flagship NDP housing initiative, dubbed BC Builds, uses $2 billion in government financingto offer low-interest loans for the development of rental buildings on low-cost, underutilized land. Under the program, operators must offer at least 20 per cent of their units at 20 per cent below the market value.

Ravi Kahlon, the NDP candidate for Delta North who serves as Eby’s housing minister,said BC Builds was designed to navigate “huge headwinds” in housing development, including high interest rates, global inflation and the cost of land.

Boosting supply is one piece of the larger housing puzzle, Kahlon said in an interview before the start of the election campaign.

“We also need governments to invest and … come up with innovative programs to be able to get more affordability than the market can deliver,” he said.

The NDP is also pledging to help more middle-class, first-time buyers into the housing market with a plan to finance 40 per cent of the price on certain projects, with the money repayable as a loan and carrying an interest rate of 1.5 per cent. The government’s contribution would have to be repaid upon resale, plus 40 per cent of any increase in value.

The Canadian Press reached out several times requesting a housing-focused interview with Rustad or another Conservative representative, but received no followup.

At a press conference officially launching the Conservatives’ campaign, Rustad said Eby “seems to think that (housing) is government’s job.”

A key element of the Conservatives’ housing plans is a provincial tax exemption dubbed the “Rustad Rebate.” It would start in 2026 with residents able to deduct up to $1,500 per month for rent and mortgage costs, increasing to $3,000 in 2029.

Rustad also wants Ottawa to reintroduce a 1970s federal program that offered tax incentives to spur multi-unit residential building construction.

“It’s critical to bring that back and get the rental stock that we need built,” Rustad said of the so-called MURB program during the recent televised leaders’ debate.

Rustad also wants to axe B.C.’s speculation and vacancy tax, which Eby says has added 20,000 units to the long-term rental market, and repeal rules restricting short-term rentals on platforms such as Airbnb and Vrbo to an operator’s principal residence or one secondary suite.

“(First) of all it was foreigners, and then it was speculators, and then it was vacant properties, and then it was Airbnbs, instead of pointing at the real problem, which is government, and government is getting in the way,” Rustad said during the televised leaders’ debate.

Rustad has also promised to speed up approvals for rezoning and development applications, and to step in if a city fails to meet the six-month target.

Eby’s approach to clearing zoning and regulatory hurdles includes legislation passed last fall that requires municipalities with more than 5,000 residents to allow small-scale, multi-unit housing on lots previously zoned for single family homes.

The New Democrats have also recently announced a series of free, standardized building designs and a plan to fast-track prefabricated homes in the province.

A statement from B.C.’s Housing Ministry said more than 90 per cent of 188 local governments had adopted the New Democrats’ small-scale, multi-unit housing legislation as of last month, while 21 had received extensions allowing more time.

Rustad has pledged to repeal that law too, describing Eby’s approach as “authoritarian.”

The Greens are meanwhile pledging to spend $650 million in annual infrastructure funding for communities, increase subsidies for elderly renters, and bring in vacancy control measures to prevent landlords from drastically raising rents for new tenants.

Yan likened the Oct. 19 election to a “referendum about the course that David Eby has set” for housing, with Rustad “offering a completely different direction.”

Regardless of which party and leader emerges victorious, Yan said B.C.’s next government will be working against the clock, as well as cost pressures.

Yan said failing to deliver affordable homes for everyone, particularly people living on B.C. streets and young, working families, came at a cost to the whole province.

“It diminishes us as a society, but then also as an economy.”

This report by The Canadian Press was first published Oct. 17, 2024.

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