Real estate markets are intrinsically tied to employment, immigration and the general health of the economy – which are all being affected by the current COVID-19 crisis. I won’t pretend to know what will happen – these are unprecedented times, after all – but here are 10 questions to consider about real estate in a post-COVID world:
- When will this all end? How long will social distancing last? Will we see a second or third wave of coronavirus and additional distancing measures if we kick-start things too soon?
- Who’s losing jobs, and how long will it take the job market to recover? People need jobs to qualify for new mortgages, and incomes to pay their existing mortgage obligations. There are government initiatives in place to assist during this time, but when will life as we know if return to ‘normal’?
- What will happen to Tenants & Landlords? COVID-19 is already affecting tenants and landlords…how bad will it get? So many of Whistler’s rental properties are owned by individual investors who are struggling with the double-whammy of tenants who can’t pay their rent and the temporary loss of their ability to enforce lease agreements while the Landlord Tenant Board is closed. What about the thousands of short term rental / Airbnb units that are now shut down and bleeding money for their owners? Will investors decide to exit the market? Or will they double-down and buy more properties if there’s a dip in prices?
- What will happen to the pre-construction real estate market? What will the financial impact of COVID-19 be on new home and condo builders? How will the Buyers who’ve already entered into contracts be affected? How long will construction be delayed? Will we see more projects cancelled? Which builders won’t make it?
- How will commercial real estate be affected? The restaurant and retail sectors of our economy were hit hard and fast by COVID, and while the federal government is trying to bridge individuals and businesses, there’s no doubt the retail and restaurant landscape will look different when this is over. How will that impact commercial real estate prices and leases?
- What does contactless real estate look like? If social distancing measures continue, how will Buyers, Sellers and the real estate industry adapt? There are stop-gap measures in place right now, but they are far from ideal for the longer term. What does buying or selling a home look like if we need to minimize personal contact? Will people buy a home they’ve never visited in person?
- What kind of life transitions should we expect post-COVID? Marriage, divorce, babies and death are some of the top reasons people buy or sell a home. Without a doubt, the coronavirus will force people into new life transitions and with it, new real estate decisions.
- What kind of Government intervention should we expect? We’ve seen a dizzying number of new government programs to help support individuals and businesses through the crisis. Will we see decreases in land transfer taxes to help spur the real estate market at some point? New first-time Buyer programs? Removal of the foreign Buyer tax and mortgage stress tests? Lower property taxes?
- How will the stock market declines affect down payments? Mid-term and longer-term Buyers often have their down payments invested in stocks, which have obviously been severely negatively affected in recent weeks. Will that force some people out of the market?
- What will happen to interest rates? The Canadian government has slashed interest rates twice in the last month, as a direct response to the COVID crisis. Will low rates continue? And at what price?
- Will financing a home get easier or harder? Easy access to money and borrowing has long been one of the drivers of Canada’s real estate market. How far will the CMHC and the federal government go to stimulate the economy through generous lending practices? We’re already seeing a tightening of the secondary mortgage market, private lending, bridge financing and home equity lines of credit – will that money flow again in the future?
What’s the one thing real estate markets hate? Uncertainty. And there’s a lot of uncertainty right now. Here’s what we do know:
- There was a ton of pent-up demand before the COVID-19 crisis hit, and there will be new real estate needs created by new life transitions too.
- The Sea to Sky is an awesome place to live, full of incredible and resistant people.
- Shelter is a basic human need, and there will always be people who need to buy and sell.
I wish I had the answers and could predict the future. But for now, I will stay home and stay safe and I hope you will too.
