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It has taken a pandemic to slow down the Canadian real estate market and disrupt how we once conducted business.
Gone are open houses, showings and speculative buyers as physical distancing rules remain in place to slow the spread of COVID-19. To be fair, many thought the measures would be temporary. And in a low-interest-rate environment, history has dictated pent-up demand would drive sales into record territory once again. It was only back in early March where we were witnessing evidence of increased sales and higher prices.
However, in early April, the number of homes sold was down dramatically — 69 per cent, according the Toronto Regional Real Estate Board — over the same period last year, while the average selling price was down just 1.5 per cent.
What was once considered simply a logistical issue, coping with the COVID-19 crisis has rapidly turned into an economic one with no end in sight.
“The longer emergency measures are in place that prevents business from functioning and people from working, the greater the likelihood of real structural damage to the economy, which will likely prolong a recovery with respect to the real estate market,” Justine Deluce, broker with Chestnut Park Real Estate Limited, said in an email.
“It's hard to set a timeline on this, but it might be well into Q4 or even the beginning of 2021 before we find ourselves back to where we were before the global pandemic.”
In the meantime, COVID-19 is forcing a change in how homes are bought and sold with the use of virtual tours and web-based conferencing.
In a recent report, RBC said housing activity could see a major pull back this year and rebound in 2021. The expectation is for sales to drop 30 per cent to a 20-year low in 2020 in the wake of physical distancing and eroded consumer confidence. However, RBC said with continued low rates, a bounce in immigration, and strength returning to the job market, the pent-up demand could help sales surge 40 per cent in 2021.
Meanwhile, Hamed Amiran, a sales representative at Royal LePage Signature Realty, told me in an email that first-time home buyers are still active, but having difficulties finding enough inventory to choose from.
The digital buying and selling of real estate could be the new norm and for those who are technologically-savvy, the pick-up in market activity could happen sooner than we think.