Connect with us

Real eState

COVID-19: Impacts To The Ontario Real Estate Industry – Coronavirus (COVID-19) – Canada – Mondaq News Alerts

Published

on


To print this article, all you need is to be registered or login on Mondaq.com.

As a result of COVID-19, the Province of Ontario has closed all
non-essential businesses, effective March 24, 2020. While every
industry has been profoundly impacted by efforts to help
“flatten the curve” and contain the virus spread, real
estate has taken a significant hit. These businesses are seeking
ways to manage this crisis, limit financial losses and understand
what relief, if any, is possible.

Crowe Soberman works with many clients in the real estate
industry including brokers, commercial and multi-residential real
estate owners, investors, developers, design-build companies and
finance providers. Below, we have outlined immediate measures these
businesses have been able to take in order to address the impact of
COVID-19 from financial and operational perspectives.

Brokerages and real estate agents

Brokerages and real estate agents have been deemed essential
services; however, there have been key changes to the way they must
operate and there is uncertainty how the market will perform as the
pandemic evolves
. According to the Toronto Regional Real
Estate Board
, home sales were down 69 per cent in the first
17 days of April compared with a year ago. Many buyers have decided
to hold off on purchases amid uncertain economic conditions. As
well, experts are predicting a drop in residential selling prices
due to factors including higher unemployment and the slowdown in
tourism, which in turn impacts short-term rental business. Despite
the market uncertainty, there are still those who need to buy or
sell right now, for various reasons. Industrious agents have had to
quickly pivot to providing services virtually rather than relying
on traditional open houses.

Fortunately, many brokerages and real estate agents may be able
to qualify for federal government incentives including the Canada Emergency Wage
Subsidy
(CEWS), Temporary Wage Subsidy for Employers
(TWSFE), Canada’s Emergency Response Benefit
(CERB), and Canada Emergency Business Account
(CEBA).

Real estate development

Real estate development during the COVID-19 pandemic has
obviously become more complex since revenue is project based and
profit is earned at project completion. Public show rooms have
closed, and economic instability has slowed down new investment,
and in some cases existing investors are pulling out of projects.
Unfortunately, real estate developers are feeling more pain as the
government programs for which they are eligible are limited.
However, most real estate development projects will continue to
receive financing through the major banks.

Property management companies and landlords

Property management companies and landlords, whether
multi-residential, commercial or industrial, have had their
struggles. While many landlords received rental payments for April
1, there are indications that collecting rents for May 1 will be a
much greater challenge. For the most part, we have witnessed
landlords and tenants showing a sense of empathy and community by
working with one another. For example, we have seen landlords with
multi-residential properties proactively offering to defer rent for
one or two months for those in need, creating rent assistance
programs or providing other allowances to help tenants get through
a tough period. Some larger commercial landlords have announced
temporary rent deferral for small businesses or independent
businesses. Particularly in the case of commercial and industrial
landlords, they recognize the need to work with tenants to help
cover costs rather than be trapped in a situation where they have
vacant properties over the longer term.

However, the key thing to remember for both tenants and
landlords is that a lease is a legal document, and both have rights
and obligations to fulfill under it. A tenant cannot simply stop
paying rent citing COVID-19. If a tenant has financial
difficulties, they should proactively start a dialogue with their
landlord and work together. And keep in mind that a rent deferral
is not rent forgiveness.

To encourage rent flexibility between commercial landlords and
tenants, Prime Minister Justin Trudeau announced a much-anticipated
commercial rent relief initiative for small businesses affected by
COVID-19 on April 24. In partnership with the provinces and
territories (which have jurisdiction over the rental market),
commercial rent will be lowered by 75 per cent for eligible small
business tenants who pay less than $50,000 in gross rent per month;
and have temporarily ceased operations; or have experienced a 70
per cent drop in pre-coronavirus revenues. (This amount is
determined by comparing revenues in April, May or June to the same
month in 2019. Alternatively, the amount can be calculated by
comparing average revenues for January and February of 2020.)

The Canada Emergency Commercial Rent Assistance
(CECRA) will provide forgivable loans to
qualifying commercial property owners, covering 50 per cent of
monthly rent for April, May and June. Effectively, commercial
property owners will receive 75 per cent of their pre-coronavirus
rental revenues for April, May and June – 50 per cent funded
by the government in the way of these forgivable loans and 25 per
cent received directly from the tenant. The federal Canada Mortgage
and Housing Corporation (CMHC) will administer and deliver the
CECRA.

If a property owner does not have a mortgage secured by a
commercial rental property, the property owner should contact CMHC
to discuss program options, which may include applying funds
against other forms of debt facilities or fixed cost payment
obligations (e.g. utilities).

More information from the CECRA announcements is included here. Additional details
from the federal government are expected in the coming weeks, along
with information about rent support for large organizations.

For landlords concerned with how COVID-19 will impact their
ability to preserve cash or even pay their mortgage, a six-month
mortgage deferral program offered in partnership with Canadian
banks, the federal government and the Canadian Mortgage and Housing
Corporation has provided some temporary relief. There is concern
over how such deferred funds will be paid back at the end of the
pandemic. Banks are also continuing to accrue interest on the
mortgages.

Deferral of municipal tax and utilities

The deferral of municipal taxes and utility payments for
property owners and commercial landlords have also provided some
additional assistance during this uncertain period. As an example,
on March 16, the City of Toronto implemented at 60-day
grace period for property tax payments and payment penalties. The
City has also extended the due date for utility bills issues by an
additional 60 days to give utility customers additional time to
take advantage of the early payment discount. Depending on the
municipality in Ontario, there are different arrangements for
property tax or bill payment relief. It is important to check with
your municipality to see if and what measures might be
available.

Finally, these businesses should seek guidance on whether their
insurance coverage addresses financial losses as a result of
COVID-19. Some commercial property policies may address business
interruption caused by disease outbreak. See COVID-19: Business Interruption Claims
for more information.

How Can Crowe Soberman Support You?

In these uncertain times, it is essential to remain agile and
proactive as the COVID-19 situation unfolds. Having timely access
to financial experts, insights and news as quickly as possible is
critical—and that’s where we can help.

We have established a dedicated
COVID-19 Resource Hub
, highlighting areas of business
operations that will likely be impacted by coronavirus. Whether you
need to discuss your current financial situation and learn what
options are available to you, or you want to be guided through the
appropriate cash flow management strategies for your business, our
team of experts are ready to help you at every step of the way.
Please do not hesitate to reach out to your Crowe Soberman
professionals for support during these challenging times.

Originally published 24 April, 2020

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

Let’s block ads! (Why?)



Source link

Continue Reading

Real eState

Real estate sales show signs of 'uptick' – Times Colonist

Published

on


The province’s phased-in approach to restarting the provincial economy seems to have had an effect on the Victoria real estate market.

Figures released Monday by the Victoria Real Estate Board show sales, inventory and some prices rose in conjunction with the second phase of the provincial restart plan.

article continues below

Last month, 457 properties changed hands in the region, and while that’s a 46 per cent drop from May of last year, it’s a big jump from the 287 homes sold in April.

“We are still down in terms of sales [year-over-year], but we were up from April, and we saw a real uptick after May 19, when Phase 2 was implemented,” said Sandi-Jo Ayers, president of the board. “We are feeling cautiously optimistic based on the numbers from last month. And our home prices have seen a slight increase from last month as well.”

There were 2,544 active listings for sale at the end of May, up from the 2,305 available at the end of April. That is still well off the more than 3,000 available in May last year.

The benchmark price of a single-family home in the Victoria core last month was $885,400, up from $884,600 in April. Year-over-year, however, the price was down from $863,000. The benchmark condominium price in the core last month was $534,300, up from $533,600 in April, and $516,400 in May 2019.

“I’d say we have seen a trickle of activity, not a tsunami. People are being cautious,” said Ayers, who noted buyers want to ensure they are employed and that they can qualify for the kinds of homes they want.

Indications are Victoria’s real estate market could avoid some of the pain other markets in Canada will face this year, she said. “We believe the way B.C., the Island and the community have responded to the health crisis and our market being local, [real estate] has responded in a healthy way as well here,” she said. “Victoria is such an attractive place to live, it’s safe and the way we responded to this health crisis is catching people’s eye and they may start to think this is a good place to retire or move.

“We firmly believe we are on the radar now.”

The short-term outlook is likely to remain cautious, but Ayers said they expect to see a lot of local movement ahead of the fall school opening, and with local buyers moving up and down in the market.

aduffy@timescolonist.com

Let’s block ads! (Why?)



Source link

Continue Reading

Real eState

Dramatic drop in Greater Victoria real estate sales in May

Published

on

There aren’t as many for sale signs up and far fewer properties are selling, as the Greater Victoria real estate market sees the effects of the COVID-19 pandemic.
“Our real estate market is responding to the health crisis,” says Victoria Real Estate Board (VREB) president Sandi-Jo Ayers. “For the month of May, that was a very tough month and April was as well.”
May saw a dramatic drop in the number of sales, down a whopping 46 per cent from last May, with just 457 properties selling.
“It’s surprising it’s only 46 per cent,” says Tony Joe of RE/MAX Camosun. “That sounds strange but when you think about it, we were a 58 per cent reduction in the month of April and I think many people sort of wondered if real estate would go to zero or close to zero.”
Inventory was down 15.7 per cent compared to last May, but that had prices holding steady.
Condo prices only dipped 3.7 per cent, with an average price of just over $453,000.
Single-family home prices were actually up 2.3 per cent to almost $876,000.
“The other surprising thing too is we’re seeing cases of multiple offers or bidding wars out there, which you would never expect in a time like this,” says Joe.
With restrictions easing in the last two weeks, agents say viewing requests are increasing and they’re actually getting lots of interest from Lower Mainland and Toronto buyers.
“We really are trying to be optimistic,” Ayers says. “We see we have a lot of people that want to move here, they want to sell, they want to buy and realtors on the street are talking about how busy they are getting.”
If you’re buying or selling, it will look different in phase three, with more virtual open houses, online tours, and masks and gloves for in-person showings, as well as minimizing the surfaces that are touched as real estate tries to rebound.

Source: – CHEK

Source link

Edited By Harry Miller

Continue Reading

Real eState

RE/MAX | Is the Toronto Real Estate Market in Trouble? – RE/MAX News

Published

on


Since COVID-related closures and social distancing took effect in Canada, life as we know it has been put on pause within the city of Toronto. As one of the hottest real estate markets within Canada, many have speculated on the impact that the public health crisis will have upon this market. While it is impossible to make a definitive prediction of how Toronto’s real estate market will weather this storm, there exists a great deal of optimism that any COVID-19 impacts are expected to be temporary.

Below, we take a look at the pre-crisis market and current conditions within Toronto, to better understand the basis of the optimism, and why Toronto is poised to make a triumphant return as one of the country’s hottest real estate markets.

A Strong Start to the Year

In the first quarter of 2020, Toronto was gearing up for a spring market like no other. Demand heavily outweighed the supply of homes for sale within the Greater Toronto Area, and the aggregate price of homes was $866,211, a 7.5-per-cent year-over-year increase. These skyrocketing prices were most apparent within the condominium submarket, where values had shot up 8.8 per cent year-over-year.

Toronto Market Reaction to COVID-19

With social distancing measures imposed to prevent the spread of the virus, Realtors across the city, and the country, have been adjusting to a new normal for conducting real estate transactions. While the real estate industry was deemed an essential service and permitted to continue to function by the Government of Ontario, open houses came to a halt. In response, real estate agents have gotten creative, using interactive 360-degree tours, or live-video sessions to showcase homes to prospective buyers. When in-person tours must take place, agents are taking extraordinary measures to ensure the safety of their clients and themselves. It goes without saying, deals are no longer being sealed with a handshake.

The impact of COVID-19’s spread and social distancing measures upon the Toronto real estate market didn’t reveal themselves in the numbers until the second half of March. Going into March, in fact, the Toronto market was still on fire. According to Toronto Regional Real Estate Board (TRREB) statistics, sales volumes had climbed 49 per cent across the GTA compared to the same period in 2019. By the second half of March, the tables turned and home sales dropped 15.9 per cent compared to the same two weeks of 2019.

Home prices, however, remained strong by the end of the month, with the average sales price for March up to $902,680 – an impressive 14.5-per-cent spike over March 2019. RE/MAX brokers in some of Canada’s key housing markets agree that prices are expected to hold steady, at least for the next few months. Despite softening sales activity since the outbreak, those who have listed their homes on the market are well aware of the sales prices in February and early March, and thus are continuing to hold their price and wait out the current crisis, until the wave of demand returns. Panic sales – in which sellers price low to get their home off the market – has yet to be seen within Toronto.

Stable Market Balance

According to Jason Mercer, TRREB’s senior market analyst, the buyer-seller relationship has remained consistent throughout the outbreak, and this factor helps to explain why Toronto’s market may not be in trouble after all. While sales volume has dipped, so have listings. Since the levels have been following the same trajectory, it’s unlikely that the market will flip to resemble a buyer’s market anytime soon. Mercer confirms that there are still a similar proportion of buyers vying for each remaining listing, and as long as this trend continues, there will be little incentive for sellers to budge on their price points.

A Little Less Optimism for Toronto’s Landlords

COVID-19 has dealt a sharp blow to Toronto’s landlords, particularly those operating short-term rentals, who now find themselves over-leveraged and vulnerable. Many real estate investors were reaping the benefits of Airbnb-style short-term rentals, where the profit margin was so much greater than a traditional lease. With the closing of the US/Canada border and the imposed stay at home measures, the demand for short-term rentals disappeared overnight, and now some investors are left scrambling to find tenants for their vacant spaces.

Toronto’s pre-crisis vacancy rate was two per cent, making the process of securing an available unit an incredibly cutthroat process for hopeful renters. Toronto also took the top spot as the most expensive rental market in the country, with a one-bedroom unit averaging $2,213 in rent per month (April 2020 National Rent Rankings from Rentals.ca).

Since the closure of non-essential businesses across the city in late March, many tenants are struggling to make rent payments. This will inevitably put downward pressure on demand for a brief period of time, even after protection measures have been lifted. This extra supply flooding the rental markets, coupled with depressed demand levels, means there is potential for average rental rates to decline within the Greater Toronto Area. This anticipated drop in rent prices and competition may translate to a less stressful home search for new renters, post-crisis.

On the other hand, some experts are warning that we shouldn’t count on this rental price relief; it is possible that following the pandemic, some buyers who had put their purchasing plans on hold may be reluctant to jump back into the housing market, and may elect to rent instead. This may help to balance out any loss in rental demand, preventing any significant drops in average rental price.

So many of these potential outcomes are dependent on how quickly life within the city can return to a level of normalcy. Toronto is already starting to see the re-opening of businesses, and if everything unfolds as public health experts are forecasting, we can hope to see a slow return to activity within the Toronto real estate market by this fall. Once a sizeable portion of those who are temporarily unemployed are able to return back to work, consumer confidence will bounce back and the demand that has fuelled the Toronto housing market for so long, will resurface.

Until then, keep yourself and your loved ones safe, and sane. This too shall pass!

Let’s block ads! (Why?)



Source link

Continue Reading

Trending