Canadian real estate investment trusts (REITs) are broadly trading higher Tuesday as investors appear to largely shrug away concerns that the newly elected Liberal minority government will soon pass policies aimed at cooling off rising rent prices.
Economist David Doyle said housing affordability is one of the files he’ll be watching the federal Liberal party most closely on, but admits he’s not sure what Prime Minister Justin Trudeau’s new government will do about it.
If home is where the heart is – the pandemic has reinforced the powerful love we have for real estate.
People believe in home ownership so much that when asked in a RBC Home Buying Sentiment Poll released Monday, 80 per cent said they believed it is a good investment. Yet, while we still appear to be in the worst period of the crisis or may even think things could get worse, 52 per cent stated they believe home values will only go up in the immediate future. Meanwhile, 45 per cent said they believed in the strength of the housing market, while only 18 per cent of those polled stated the overall economy is strong.
Interestingly, of those looking to buy a home right now, 38 per cent would look in the suburbs and 26 per cent said they’d consider a rural location.
Throughout the crisis we have demanded more from our homes. In some cases, offices were created, home gyms activated and makeshift schooling workstations were added. We now look at our homes differently and have a clearer picture of how we use our space. We also have a much better appreciation of how we value them.
While many of us have made adjustments to our living spaces to accommodate working from home, some are left wondering if the changes may become more permanent. This naturally leads us to another question: Do we need more space?
As priorities shift, many Canadians are readjusting their expectations for what they want from their homes. "Fear of the pandemic and high home values continues to drive many Canadians further outside of major city centres, both in search of affordability and more space," Amit Sahasrabudhe, RBC’s vice-president of home equity financing, products and acquisitions, said in a release.
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To me, this just makes sense. This past year has proven that many Canadians can work anywhere at any time, as businesses were forced to implement new policies in order to ensure workplace continuity. Sure, there will be businesses that require employees to physically come into the office, but at the same time many business owners see the value of reducing office-related costs.
Ultimately we may see a hybrid model of time in the office and time working from home. The landscape is shifting and will impact not only residential real estate, but commercial real estate as well.
In the meantime, Canadians are sitting on a lot of cash, in part because they simply have been unable to spend it. They are proving to be financially resilient through the crisis and homes are being seen as a pillar of stability.
If you are not looking to physically move, home renovations, garden retreats, kitchen and bath upgrades are all on the rise as more people cook from home, use their homes and enjoy their homes in new ways. A main source of funding is the redirecting of travel dollars into home renovations and the boom continues.
Our needs are changing. There simply may not be the desire to live in an urban centre, demand is growing to have more space, interest rates are likely lower for longer and affordability issues are aligning to support what were once-considered to be commuter communities.