How Coronavirus (COVID-19) has Affected Real Estate
Written By: Adrian Trott, Co-Owner A question we receive daily from curious family, friends, followers and random strangers surround how the Coronavirus has or will impact the real estate market. For starters, it’s common knowledge that the economy has taken a big hit. As a result of the coronavirus (COVID-19) and plummeting oil prices, we’re heading into a recession, possibly globally. However, we’re yet to see any significant changes in our local real estate market that would indicate it’s following suit. To combat a downturn in the market, as a result of COVID-19 and sharp reductions in oil prices, the BOC (Bank of Canada) has reduced the overnight rate. On March 4th it was reduced by 0.5% and a further 0.5% effective March 16th. Putting the total at 0.75% –0.5% higher than the US. These reductions, coupled with an easing of the Stress Test, have increased affordability of real estate across the country. I believe that it has also instilled a sense of consumer confidence, which we’re witness to daily. One of the most valuable tools we real estate agents have in determining the direction of the real estate market is our experience in day-to-day activities. The number of appointments scheduled and offers registered by buyers on our homes for sale. And, most importantly, we hear the first-hand feedback from other real estate agents and end-users as to their outlook on the market. How has the coronavirus (COVID-19) affected business? Without stating the obvious general hygiene and handwashing, we have implemented a number of changes: Cancelling Openhouses One of the first changes to our process has been cancelling all public open houses and limiting visits to our properties for sale to private showings, scheduled directly with our team of real estate agents or through a buyer’s own real estate agent if they have one. This was done to limit the number of unnecessary visits to a house. Limiting Lease (Rental) Showings Properties listed for lease (rent) receive dozens of inquiries, daily. Our processes have always been that of qualifying tenants first. Many tenants have credit delinquencies that would prevent them from being considered as a tenant. Others already have Real Estate Agents they will be working with and, after learning their needs and wants, many are going about the process completely wrong. By learning these details in advance we can help them better. During a time of being cautious of who we’re interacting with, we’ve cancelled all public visits to our rental properties. Between professional-quality photos and 360-degree videos, tenants have plenty of shopping tools. In fact, we’re confident these tools provide enough insight into a home that tenants can make decisions site-unseen. Accordingly, we are only showing rental properties to those working with another Realtor, who can schedule a private showing and those who submit an acceptable application. The latter will include a condition for the tenant to view the property before finalizing the offer to ensure the home is a good fit. Working Virtually Many of the tasks we perform can be completed effectively and efficiently, digitally. Our team is now often completing appointments of various nature by video call, text message, telephone and email. What are the longterm impacts of coronavirus, COVID-19 It’s reasonable to think that with the downturn in our economy we’ll experience reduced consumer confidence. This may impact the real estate market. However, given how aggressive the government and the public have been to adapt, it’s likely the change will be short-lived. It’s also highly probable that it would bounce back with vengeance. These opinions are just that, opinions. It will be interesting to see how this all plays out. In the meantime, we encourage everyone to stay calm, make sound and clear decisions, be safe and stay home if you’re sick! If you want to hear more about our thoughts on how COVID-19 is impacting real estate, our last two podcasts touched on the subject.
Get What You Paid For
You’ve successfully purchased your dream home, congratulations! The house has every feature you ever dreamed of, a lawn that would make most golf courses envious and a pool fit for a Michael Phelps –fast forward to move-in day– you get the keys and show up at the house to find a mess. There’s a jungle of a lawn with grass up to your knees, a pool full of green water and a sweltering hot and humid home with dings in the walls and scrapes on the floor. Surprises like this are not uncommon but they are completely avoidable. Here are a couple of tips to ensure that the house you purchase is the house you get: Include Clauses When Buying a House While including clauses in your offer doesn’t mean the seller will abide by them, it may help in providing you with some degree of recourse if they don’t. Clauses to consider including in your offer would be those addressing the seller maintaining the property in a condition similar to that viewed at the time of purchase. Specify things such as maintaining temperatures and relative humidity levels inside the home –extreme temperature and humidity fluctuations will damage building materials such as hardwood floors and stairs. Specify that the lawn and gardens are to be maintained as well and that no garbage or personal belongings are to be left behind. Revisit Your New House Before Closing This one is crucial. We always include a minimum of two visits with offers. These visits can be used for a number of things, from showing off the property to the rest of the family to taking measurements for window coverings and having contractors provide estimates on renovations you’d like to do. Most importantly, these visits are your opportunity to walk through the house to ensure that it is in the same condition as it was when you purchased it. We always recommend completing one of the visits very close to the completion date and taking lots of photos during all visits to ensure you have a reference point if there’s ever a concern. I recall one time when buyers revisited a house and found a minor leak that had just started. They brought it to our attention and we were able to get the water shut off and the problem remedied immediately. Had this of been left much longer, it would have been a much bigger issue. Also, if the property is vacant or you plan on having work done and want companies to provide quotes, it would be a good idea to try and negotiate more than two visits in the deal –you may want to ask your real estate agent about this clause and how including specific details about who is allowed to attend the appointments and for how long the visits can be very important. Some homeowners won’t want more than you and your real estate agent visiting and therefore specifying those details can prevent problems later on. Keep all of this in mind when you buy your next house, especially vacant homes, where nobody is visiting on a regular basis. If you have questions about moving and want some advice, feel free to contact us with questions anytime. Check out this clip on our IG about this topic: