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Toronto Real Estate: Selling During a Pandemic – RE/MAX Canada News – RE/MAX News

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Toronto real estate has favoured sellers for some time now, with growing demand and low inventory creating a perfect storm for rising prices. The Toronto real estate board reported a flurry of activity in early March, with homeowners listing their properties in anticipation of another busy spring real estate season. Meanwhile, buyers faced the ongoing challenges of affordability and stiff competition. Those who were planning a move had already likely bought their new home before listing their existing one – a common practice when inventory is low and competition is stiff.

Then the pandemic hit, social distancing bylaws took effect and the world as we know it changed. Well, not everything changed. Those who had already purchased their new home still had to sell. With a busy spring predicted for Toronto real estate prior to the pandemic, many were already waist-deep in their transaction.

RE/MAX had a chance to sit down with a recent homebuyer/seller who, under these very circumstances, experienced the “virtual deal.”

PODCAST: Transacting in Real Estate During a Pandemic: In this episode, RE/MAX chats with a recent homebuyer/seller about her experience transacting amidst the global pandemic, why her home sale couldn’t wait, and how her realtor facilitated a totally touch-less transaction. Listen to the podcast here.

Toronto Real Estate – In with Both Feet

“Pre-pandemic, we were certainly considering getting a house. We have two houses at the moment, my fiancé and I, and we’d like to live together and get a move on things, so we were just kind of starting out. We came across a house that wasn’t even officially on the market yet. We saw a sign that read “Open House” and we went and checked it out.”

As is common in a hot housing market such as Toronto, she was charmed by the home and jumped in with both feet – while the listing was still up for grabs. As a buyer, her biggest concern at the time was if she could afford to live in this neighbourhood, and did she even have a chance at winning the sale, given the bidding wars typical of the Toronto real estate market.

The transaction proceeded fairly quickly, with just one week between first seeing the home, the agreement to purchase on March 9, and the closing looming on April 30.

But by March 13, social distancing measures were already taking effect. Toronto Mayor John Tory declared a state of emergency in Toronto, Ontario Premier Doug Ford ordered the shuttering of all non-essential workplaces, and everyone hit “pause.” Meanwhile, our homebuyer was now faced with selling her property under very different circumstances than existed just a few days prior.

Selling During the Pandemic

“COVID had drastically escalated at this point, with questions about whether real estate agents were even an essential service at this point, which caused a bit of panic. This was a pretty stressful time,” she told us. Beyond that, she questioned, “Who would want to buy our house at this time? And how would we even go about it? Where do we start? We only knew that we had to sell.”

The buyer says her realtor played a vital role in coaching her through this initial panic, and other anxious moments that would inevitably follow.

“This was just before March Break. The schools had just closed, and the province was in a state of emergency. Our realtor was also going away [on a trip] so we were going to have to see her after returning . . . which was a concern for us. She made a schedule, told us we need to start decluttering now, and said she’d be in touch with us as soon as she got back.”

READ: Why is real estate an “essential service?”

Overcoming Hurdles, One at a Time

On March 23, the Ontario government declared real estate an essential service. The realtor texted the seller before the decision had even been made public. “She showed a lot of concern for us, she was proactive, and she kept us calm. There was a lot of outreach from a safe distance to keep us calm and keep things in motion to get our house prepared for sale.”

When the realtor returned to Canada, she had to self-isolate for two weeks, but the lines of communication were wide open and well-used thanks to FaceTime – sometimes two or three times a day. “She could see the state of our house and give us suggestions along the way, because she couldn’t come in.”

This was still the early days of Zoom and FaceTime. Most of us have quickly become well-versed with these apps, but they were alien at first. “It was tough because [our realtor] had expectations, and I think she felt guilty that she couldn’t be there in person. In place of that, she really wanted to be involved. We talked to her a lot and she got to know our family very well. She stepped up and used whatever tools she had to keep us reassured.

“She was protective of us, gave us the option of getting painters/cleaners to come in, or having us to that ourselves. We decided we didn’t want people coming in to provide those services. We did them ourselves. She checked in on us and keeping a close eye on our progress with our many tasks.”

The Virtual Open House

Once the seller’s efforts came to a close, they couldn’t host an open house, so like her previous meetings with her agent, open houses, showings and negotiations took place virtually.

The listing was still open to Toronto real estate agents wishing to view the property. “Our agent told us the meeting times, so we would know who was coming in. She advised us to leave the house so we wouldn’t be exposed to anyone coming in, and she let agents know they had to be cautious and could not touch anything. We felt protected, knew who was coming in.”

The seller took her realtor’s advice and vacated the property during the selling process. Aside from five scheduled showings, an in-person home stager and photographer, the seller was comforted in knowing that only a small number of people ever entered her home.

“What was really helpful was that she was so experienced and well-connected in her field. She informed agents and got the word out, not only about the virtual open house but she let her colleagues know what was going on and certainly kept us in the loop on everything.”

The seller got multiple offers within 24 hours. Despite the obvious challenges presented by the pandemic, the seller was fortunate to have other stars aligned in her favour: the Toronto real estate market’s characteristic low housing inventory and high demand, coupled with a hot neighbourhood and a professional, experienced real estate agent at the reins.

“She did her research. She was up on the daily markets and doing comparisons in our neighbourhood – every day was different,” the seller told RE/MAX. “The panic was on, we’ve got to sell fast. We talked about strategies, she was open to our thoughts and we were a team. That’ a big point – working with her was a team effort.”

The agent advised the seller to price the home aggressively, with the caveat that if it didn’t sell quickly, they’d have to lower the price within the week. “She was following the markets and we had daily communications She was a real go-getter. She wanted our house to look perfect so we felt we wouldn’t be in the position to settle or price it too low. She was very confident, which helped us feel more confident.”

The Offer and Negotiations

When an offer came in, the seller was understandably excited. The pressure was on to sell the property as soon as possible. “When an offer came in, [our agent] gave us the scoop and she didn’t settle. We were very excited to get an offer, but she didn’t feel it was the right one for us. We tried our best to be patient, knowing that we had to sell. We were ready to jump in, but we held back a bit and she was right.” Then within 12 hours they received additional offers, which put the seller in a great position. This forced the buyers to really be competitive in their offers.

The home sold in less than two days for roughly one per cent less than the asking price.

Everything was done online through e-documents – a completely paper-less and touch-less transaction. There was some back and forth in the negotiation, but overall the seller says it was a seamless process.

“I don’t think we could have done it without the help of a realtor. We had a long to-do list. She kept us calm and on track. She had the right tools and was so well-connected in her field that she knew where to turn.”

Her advice for buyers and sellers right now? “You want to find an agent that’s experienced and has been in the field for a number of years; a professional who is well-connected and has technological skills – because that’s everything during a pandemic.”

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Gloomy B.C. real estate forecasts not as bad as some predict: agent – CityNews Vancouver

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VANCOUVER (NEWS 1130) — The forecast for buying and selling real estate in B.C. isn’t what it could have been, but it’s not as bad as the double-digit price drops some analysts have predicted, according to a Richmond presale condo and townhouse agent.

Vince Taylor admits he’s biased, but said the facts are not — supply is low in B.C. and interest rates are historically low, so prices will be relatively stable.

“I am expecting a drop-off for sure. I don’t expect the market to rebound in 2020 like it was going to in March, but I see no structural, no macro or micro economic reason for the kinds of drops that have been reported,” he said.

“Tell me how that makes any sense that prices are going to go down when you have the lowest interest rate in 40 years, limited supply, and not that many people actually lost their jobs.”

He adds the COVID-19 cloud is dark, but there is a silver lining, and nothing structurally has changed about the real estate market.

While Canada is seeing the worst GDP numbers in a decade, Taylor said the easing of health and safety restrictions will bring more buyers and lower prices to the market.

The Canada Mortgage and Housing Corp. expects home prices and sales to decline substantially this year and still won’t have recovered by the end of 2022.

The federal housing agency’s special housing market outlook predicts home prices to decline between nine and 18 per cent, and as much as 25 per cent in oil-producing regions, before starting to recover by mid-2021. The report also suggests average home prices in B.C. could drop close to $100,000 this year.

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Will real estate prices plunge? That may depend on the sellers – Financial Post

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The economic uncertainty surrounding COVID-19 has contributed to contradictory estimates of future housing prices and sales. Leading the bears is the Canada Mortgage Housing Corporation (CMHC), projecting average housing prices to fall by nine to 18 per cent.

Others, including economists at the Canadian Real Estate Association (CREA), are not convinced prices will fall as steeply as the CMHC projects. Many homebuyers and sellers have been left perplexed by these conflicting forecasts — much can go wrong if they rely on the wrong estimates in their buy and sell decisions.

Regardless of the sophistication of algorithms, forecasts are necessarily a byproduct of the assumptions forecasters make and the data they use. Assumptions, inherently, are neither right nor wrong. They are informed guesses about future outcomes. When reviewing a forecast based on modelling, always remember the advice from the famed statistician, George Box: “All models are wrong, but some are useful.”

The CMHC forecasts were generated using “a specific set of assumptions for the market conditions and underlying economic fundamentals,” CMHC noted in the report’s appendix.

But how precise are they? CMHC estimates that average Canadian housing prices in 2020 will be anywhere between $493,200 and $518,400, representing a nine to 18 per cent decline from pre- COVID-19 levels. The number of sales transacting through the Multiple Listing Service is expected to be between 416,000 and 450,500.

The above forecasts are for the average price in Canada. Local market forecasts could be much different. CMHC reported provincial estimates for prices, sales and housing starts, with all provinces seeing the same trend of falling metrics through 2020 and a rebound starting later in 2021.

The lowest average price forecast for British Columbia at $609,515 is still more than double that for Alberta at $288,522. Both numbers are for the second quarter of 2022. The lower bound forecast for Ontario at $531,715 is slated for the second quarter of 2021, which suggests that CMHC expects housing markets to recover sooner in Ontario.

CMHC’s report does not disclose the methods or data used to generate forecasts. The report mentions that CMHC forecasts deploy the “full range of quantitative and qualitative tools currently available.”

The report claims that the forecast’s “range provides a relatively precise guidance to readers on the outlook while recognizing the small random components of the relationship between the housing market and its drivers.” However, the wide range of forecast for prices and sales is indicative of the “high degree of forecast uncertainty” partly due to the “unprecedented nature of the COVID-19 pandemic.” To us, therefore, the claim for precision may be a stretch.

Homebuyers and sellers need to be able to understand what forecasts mean for their decision-making processes. Economists prepare estimates with care. However, when predictions differ from the real outcomes, economists readily revise their projections. Homebuyers and sellers, once they have transacted, cannot “revise” their transactions. Hence the stakes are higher for the ones active in the market.

Another way of thinking about future housing prices is to think about the willingness of sellers to accept lower bids for their listings. If one is of the view that sellers will be, on average, willing to accept bids 18 per cent or more below than what they could have received before March 2020, a significant decrease in housing prices could be inevitable. However, this seems to be an unlikely scenario.

If prices start to decline significantly, sellers can slow or even freeze the market by not listing their properties, withdrawing them from consideration, or refusing a lower bid. Sellers’ unwillingness to sell dwellings at lower-than-expected prices can protect against a freefall in housing prices. Also, when less inventory is available for purchase, buyers may have to compete, which could put upward pressure on prices.

Lastly, the average decline in the average price does not imply that an individual dwelling will experience an average drop in valuation. Why? Because the average price forecasts ignore the differences in sizes and quality of housing or the fact that when economic conditions worsen, higher priced homes stop transacting, and lower-valued homes dominate the sales. The shift in the structural composition of housing gives a false impression that housing prices are falling. Thus, CREA’s estimates of constant quality homes are not as severe as CMHC’s.

Homebuyers and sellers should have a look at the market forecasts. But they should base their decisions on their circumstances and local housing market conditions. Remember, forecasts are useful, but not necessarily accurate.

Murtaza Haider is a professor of Real Estate Management at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached atwww.hmbulletin.com.

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Douglas Todd: China's real-estate investors down on Vancouver, but not out – The Kingston Whig-Standard

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Opinion: Even though Metro Vancouver’s real estate might be down in the minds of many of China’s wealthy, they’ve not abandoned it

Opinion: Even though Metro Vancouver’s real estate might be down in the minds of many of China’s wealthy, they’ve not abandoned it.

RICHARD LAM / PNG

Huawei CEO Meng Wenghzou must stay under mansion arrest following this week’s court decision in Vancouver. China’s authorities rage, while continuing to unfairly jail Michael Spavor and Michael Korvig and drastically cut imports of Canadian canola.

Rival ethnic Chinese groups clash in the streets of Vancouver over Beijing’s clampdown on Hong Kongers’ freedoms. COVID-19 kills more than 6,800 across Canada and lockdown virtually ends international travel, sending home many of China’s foreign students, especially from Toronto and Vancouver.

China-Canada relations are at their lowest ebb in decades, particularly according to China’s pervasive regime-backed media outlets, which this week called Canada a “pathetic clown.”

And that has implications for Metro Vancouver’s housing market.

This region of 2.6 million is feeling the impact of soured relations with China, even while polling suggests the city continues to retain some of its traditional allure to the world’s most populous country as a desirable place to experience and invest in.

In addition to geo-political tensions, however, it must be said that Metro Vancouver’s real-estate market has also lost some of its global appeal because of financial trends. As a result real estate prices fall in many parts of the West, especially in the Lower Mainland. That’s while housing values have been rising in China.

Let’s look closer at what’s leading China’s upper- and middle-classes to steer away from buying into Metro Vancouver real estate like they once did.

China’s investors are also this year not pouring the same billions into high-end commercial or residential properties in adjacent Hong Kong, which has up until now been the top investment destination for China’s wealthy.

One reason for China’s investors pulling back is their rising suspicion of the West, including because of the erratic ways the U.S., some European countries, Canada and others have handled the coronavirus outbreak.

Although the World Health Organization and other health experts say COVID19 emerged in Wuhan, China’s state media claims the country has kept a better lid on it than the West. That’s lead to nervousness among many Chinese citizens about getting sick abroad, as well as fear about being blamed for spreading the virus.

The South China Morning Post, for one, has been talking to rich and middle-class people around China and discovering they’re losing their appetite for buying real-estate “investment vehicles” in the West, in part because of such COVID-19-related fears and mistrust.

That’s goes with their weakening desire to send children to study abroad, where many became involved in real-estate on behalf of their families. At the end of 2019 there were 640,000 students from China around the world, 144,000 of whom were in Canada and 50,000 in B.C.

In addition, however, an equally strong force that is diminishing Chinese people’s interest in buying Metro Vancouver’s pricey houses and condominiums, according to the Hurun Report, is that the city doesn’t offer the same profits it once did.

Housing values have dipped in Metro Vancouver since 2016, when buyers from China were deeply engaged in pumping up the city’s luxury market. And the Canada Mortgage and Housing Corporation predicted this week prices could fall an additional nine to 18 per cent in Canada because of the pandemic, and even slightly more in British Columbia.

Bigger real-estate profits are to be made in China.

The widely read Hurun Report is considered an authority on what it calls “China’s high-net-worth individuals.” And its 2020 report said, even before COVID hit, that China’s rich were finding some of the most rewarding real-estate ventures were in their own country.

“Twenty-seven Chinese cities entered the top 50 cities (around the world) with the highest house price increases,” said this year’s Hurun Report. Many of those Chinese cities had values leap 35 to 45 per cent over just three years. There’s no suggestion such hefty profit margins are being seriously dented by COVID-19.

Related

Much of the sharp rise in China’s real-estate prices is the result of its authorities becoming more intent about enforcing a US$50,000 a person limit on the movement of funds out of the country – and banning the widespread use of credit cards, including China’s UnionPay, for buying foreign real estate.

Vancouver realtor David Hutchinson said this week that, for many of the reasons mentioned here, “China is not coming” to local real estate like it once did. “That ship has sailed.”

His perspective echoes that of West Vancouver realtor Nicole Lee, who said earlier that many rich clients from China are looking elsewhere now that B.C. has brought in a foreign-buyers tax on housing, along with a speculation and vacancy tax.

However, even though Metro Vancouver and it’s real estate might be down in the minds of many of China’s wealthy, they’re definitely not out.

Although five years ago China’s rich ranked Metro Vancouver as the third most desirable city in the world for “overseas property purchases,” this year’s Hurun Report says they still rate this relatively small city on the West Coast of Canada as seventh.

In addition, the Hurun Report says China’s high-net-worth parents pick Canada as their fourth favourite place to send their children for an education. As well, out of the 10 million Mainland Chinese who are transnational migrants, according to the Migration Policy Institute, half have ended up in Hong Kong and the U.S., while Canada has been, and remains, their third most popular choice, with Australia fourth.

There are now more than 500,000 ethnic Chinese people in Metro Vancouver, the majority, because of recent migration trends, from China. They can find familiarity in the city’s vibrant ethnic Chinese supermarkets, retail outlets, entertainment, restaurants and housing.

There might not be quite the tremendous volume of money coming out of China into Canada’s property market as there has been in the past two decades, but streams of Chinese capital are sure to continue to make their way across the Pacific.

That should be the case despite the tensions wrought by COVID-19 lockdowns, Huawei controversies, Hong Kong clashes and even a stumbling local real-estate market.

dtodd@postmedia.com

MORE RELATED:

Douglas Todd: How would Vancouver’s housing bubble burst? Look to China (2017)

Douglas Todd: The ethnic refashioning of Metro Vancouver (with interactive maps)

Douglas Todd: Canada, Australia take different tacks on immigration amid COVID crisis

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