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:
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.
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.