How is the Coronavirus Pandemic Impacting Canada’s Spring Housing Market?

If I’d been writing this article in February, I would have opened by saying, based on the stellar performances of many of the country’s major housing markets throughout the winter, the spring season is set to be a potential record-breaker.

What a difference a few months can make. The COVID-19 pandemic has drastically changed the way we live. From the way we buy groceries and stay fit, to the way we earn a living and conduct business, there’s no aspect of our lives that isn’t affected by this dangerously contagious disease.

During this time, Canadians should be focused on staying home, staying safe, and supporting family, friends, and those in their community who need it.

But for those wondering how the spring market might be affected by the pandemic, I’ve put together three of the key trends and potential outcomes below.

The COVID-19 pandemic has taken the wind out of the spring market’s sails

In the second half of March 2020, real estate boards across the country recommended their members to halt all open houses. This was an essential move in-line with physical distancing that policymakers and medical professionals say is critical to prevent runaway spread of the virus. It barely warrants noting that it will be a huge struggle to continue to sell homes at a time when prospective buyers are told to avoid leaving their homes and are likely wary of spending large sums in the current economic environment.

With these restrictions, REALTORS® are beginning to rely more heavily on virtual tours and open house live streams using tools like Zoom, Instagram Live and FaceTime. In these instances, REALTORS® ensure the houses are empty or that their clients can be the one filming a walkthrough so everyone can safely keep their physical distance. REALTOR.ca is offering home buyers the option of browsing listings with virtual open houses and encouraging home sellers to speak to their REALTOR® about opportunities to showcase their home digitally.

Despite this pivot to a digital-first approach in so many aspects of the home buying and selling process, housing markets across the country have clearly already been impacted by the coronavirus pandemic. March data published by the Canadian Real Estate Association (CREA) on April 15 showed nationwide sales activity fell 14% from February, even with only half of the month being affected by lockdowns. Preliminary sales figures from major markets like Toronto and Vancouver suggest an even steeper decline is in store for activity in April.

That said, March’s overall performance, both nationwide and in major markets, showed that demand for housing was strong prior to the pandemic taking hold. On March 22, Brian Persaud, a Toronto broker and REALTOR®, shared a recent seven-day sales activity total that still dwarfed the same period in 2019. In Vancouver, sales in the first half of March, before physical distancing measures were put in place, were nearly 60% higher than the same time last year.

With sales activity like what was seen in the first half of March, it’s likely buyer demand will be pushed forward to a future season, rather than evaporate into thin air. That said, there could be several months of significant declines in sales activity in markets across the country.

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A rebound could be in the cards for fall 2020

On March 16, BMO Economist Priscilla Thiagamoorthy wrote Canadian home sales activity was set to slow “markedly” but the market would be set for a “revival” in the second half of the year should the virus’s impact begin to ebb. Beyond a dampening of the virus’s effects, she cited lower mortgage rates as being the fuel a home buying frenzy would need to really take off.

Mortgage rates were already near historic lows heading into the spring season and, with further rate cuts from the Bank of Canada throughout March, they’ll be set to remain low for a while. Home buyers looking to stretch their budget will be able to take advantage of rock-bottom rates for months to come.

Home builders and their sales teams are adapting

New home builders, reliant until a few weeks ago on presentation centres and crowded sales launches, are evolving their practices to keep their team members and prospective buyers safe.

Dan Flomen, Executive Vice President of Empire Communities and President of TFN Realty, said digital communications tools like FaceTime, Zoom and Skype will be made available to staff, customers and potential buyers to use. Flomen said that wire transfers, electronic signatures and couriers will all be utilized to avoid in-person contact.

Even when the most stringent measures are loosened, industry professionals will likely need to continue to embrace technology and new approaches that minimize contact for months to come. During this time, home buyers can expect a lot more video calls and virtual tours in an industry that often prioritizes in-person interactions and touring physical spaces.

Once the worst of the pandemic is behind us, a return to normal is still likely a far way off. REALTORS® are adapting to these challenges and preparing for the new normal so they can continue to best serve their clients. Even through periods when strict measures are required, there will still be a need for some home sales to take place. REALTORS® remain ready to advise their clients so they can put safety first and follow public health advice while still effectively guiding buyers and sellers through this unprecedented time.

MBN

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