Love it or hate it — whether you’ve witnessed the meteoric rise in your property’s value over the past decade, or felt the deep frustration of wondering if you’ll ever be able to afford a home in the city — there are few among us without a strong opinion.
That was the case long before the city came to a grinding halt in the face of COVID-19.
Today, in the midst of these “uncertain times,” most of us find ourselves at home, wondering what post-lockdown life is going to look like.
And while there is no shortage of opinions – everywhere, from everyone – the real estate hot takes are especially interesting.
That’s because they are all over the place.
Some say that what was poised to be the hottest spring market on record is just on pause, and will reactivate the moment eager buyers and sellers are released from quarantine.
Others forecast a much bleaker picture than “business as usual.”
Surely, Toronto real estate can’t emerge unscathed from a global economic downturn with historic unemployment numbers, and questions about if and when the virus’ next wave will hit?
Will it mirror the fall and recovery of the great recession of 2008-09?
While there is no shortage of educated people with intelligent opinions, we just don’t know yet.
Given that the definition of “market value” is what a given property will sell for on the open market, we will need the real estate market to open up again, before we can get any real sense of our new normal with respect to house prices and property values.
In the meantime, there have been some government decisions made in response to the COVID-19 pandemic that are already having an impact on the here and now.
After years of historically low vacancy rates on the rental market, largely attributed to investor-owners experiencing bank-robber returns through short-term rentals, the lockdown had an immediate impact.
Suddenly investors have unrentable units to carry.
Almost immediately Craigslist and Kijiji were flooded with new rental apartments.
For renters who have been forced to endure once-inconceivable bidding wars on apartments approaching peak unaffordability, this is great news.
More supply means less demand – you can expect prices to adjust accordingly.
Even without a crystal ball, we can certainly expect to see an immediate impact on the condo market.
Those same investor-owners are suddenly entering their second month of lockdown with no clear end in sight.
Mortgage relief options are limited for non-principal residences, and the short-term rentals that used to cover costs and then some are now banned outright in the province.
Many investors will find they have no alternative but to offload, so it would be entirely reasonable to expect a rise in “distress sales.”
Even pre-construction condominiums will surely take a hit as buyers under contract, now experiencing lost earnings and unemployment, may no longer qualify for financing and could be unable to close on their deals.
Is this bad news?
For some it’s not great.
But is it opening up a wedge of opportunity for buyers and renters who have long needed a break? Absolutely.
So, while we have all surely lost patience with false optimism in the midst of this pandemic, everything isn’t completely awful.
— Lackie, a second-generation sales representative, has been with Chestnut Park Real Estate, helping her clients navigate the challenging Toronto market since 2011. @brynnlackie
Toronto and Vancouver Real Estate Inventory May Get A Boost From AirBNB Slowdown – Better Dwelling
Canadian real estate markets may be getting another inventory headwind soon. National Bank of Canada (NBC) research estimates AirBNB hosts may contribute to oversupply later this year. As the slowdown impacts hosts, many may be incentivized to sell. By their estimates, just a quarter of hosts selling would cause inventory in cities like Toronto and Vancouver to swell.
AirBNB and Housing Inventory
AirBNB helps homeowners take existing housing stock and convert it to short-term rentals. Rather than staying in hotels, travelers can now stay in existing non-hotel stock. At first, it wasn’t a big issue when just a few people were doing it. As the platform expanded, people began buying additional housing just to operate short-term rentals. By repurposing housing that would otherwise be long-term units, cities now need additional housing. Basically, short-term rentals lead to an inventory squeeze, pushing rents and prices higher. Temporarily at least, for as long as the squeeze persists. That squeeze could end as quickly as travel did.
The Travel Industry Expects A Big Slowdown
The travel industry doesn’t expect travel to recover quickly from the pandemic. The US has approved some routes cutting plane traffic up to 90% until September. The IATA, the trade association for international airlines, also doesn’t see traffic returning to 2019 levels until at least 2023 – at the earliest. What does this mean? Fewer users of short-term rentals, and more competition from hotels for those travelers. All of this can have a big impact on real estate inventory, according to NBC numbers.
Canada’s Biggest Real Estate Markets May See Inventory Spike
If just a quarter of AirBNB inventory is sold off, NBC sees a lot more real estate listings on the market. In Vancouver, the bank estimates real estate listings would rise 12%. Montreal would see an increase of 27% in resale listings. Toronto is another story though, with inventory forecasted to rise a whopping 34%. That’s with just 25% of AirBNB exiting as hosts.
AirBNB Boost To Canadian Real Estate Inventory
The potential increase in real estate listings if 25% of AirBNB properties were listed for sale.
Source: National Bank of Canada, Better Dwelling.
The boost is another headwind for inventory rising later in the year. Inventory was already expected to rise in the coming few months. NBC economists believe this would be “exacerbating oversupply in the coming months.”
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How Is The Real Estate Market In Muskoka Post COVID19 – Hunters Bay Radio
In a brand new video podcast series, Gerry Lantaigne with Sutton Group – Muskoka Realty discuses the world of real estate in Muskoka during the Coronavirus pandemic.
Join Gerry every month as he updates you on The State of Real Estate
Watch the inaugural episode here:
May real estate sales in Powell River promising, says board president – My Powell River Now
Powell River’s real estate market is warming up.
Powell River/Sunshine Coast Real Estate Board president, Neil Frost, said May sales were “surprisingly good.”
“We were up significantly from April,” Frost said. “April was very poor, but of course that was obviously due to the pandemic and state of emergency declared in B.C.”
Frost said there were 23 residential sales plus two vacant land sales in the city last month, which is up from 11 total sales in April.
He added that those numbers are promising, especially in these uncertain times.
“March started out great and in the last half (of the month) really trailed off, and then April is where we’ve really felt the effects,” Frost said.
“May and June have already been very busy. Year-over-year, we’re looking at 41 sales for May 2019 and we had 23 for May 2020, and those are residential sales. Total sales for May 2020 was 25 total sales compared to 46 total sales for 2019.
While down from last year, Frost said 25 sales in a month is “pretty strong for our market.”
Affordability is helping to drive the market locally. Frost said the average home price is roughly $390,000.
“We’ve even seen some competing offers and property selling for over-list price,” Frost said.
The pandemic has changed the way realtors do their job, Frost said: “Worksafe BC has released a series of protocols and each office has also developed their protocols and basically, we’re trying to avoid in-person showings as much as possible.”
That said, serious buyers want to see a home in person before making the biggest purchase of their lives.
“We do take precautions, depending on the seller’s threshold,” Frost said. “Definitely sanitizing, and gloves, and facemasks if requested, (physical) distancing at all times, buyers are asked to keep their hands in their pockets and not touch anything in the homes, limit the number of people inside a home at a time. Really trying to restrict it to the serious buyers or the people that are going to be on title.”
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