As you’re reading this, I hope you’re at home. I hope you’re staying safe. And I hope you’re feeling well. As we head into a long weekend in a few days, find time to spend with your family. Take a pause. And I know it’s hard to ask — but try to release some of the stress and anxiety you’ve been feeling by spending some time on something you want to do for yourself. Safely take a walk outside. Maintain your social and physical distance. Do your groceries with personal protective equipment and do it well ahead of the long weekend. Think about what’s really important in your life right now.
Around this time last year, my family and I were on a vacation in Japan. I remember how amazing the time was. The places we visited. The culture. The food. The sightseeing. Travelling on trains throughout the various cities we visited.
It was also a place where wearing a face mask was commonplace. It didn’t feel awkward at all. In fact, it’s customary especially if you were not feeling well. And even if you were feeling well, wearing a face mask on a crowded train, inside a supermarket, and even while walking up and down streets was pretty normal.
Please Wear Your Face Mask
Ever since COVID-19 hit Ontario, I was taking safety precautions. Wearing a mask when I was outside, doing groceries, and even during the final days of ‘office work’ before we were mandated by my brokerage to work from home.
But let’s talk about how other people reacted to me and others wearing face masks. Some people in the grocery store would give me the stare. On social media, there were endless comments of people outright telling those who wore face masks to ‘get the hell out of the grocery store and stay home’.
There’s clearly a lack of understanding and a skewed perspective by many people about how serious COVID-19 is. And maybe it takes designer clothing companies wanting to remain an essential service to mass produce designer face masks in order for the majority of people to understand it’s okay and in fact a positive thing to wear a face mask in public.
I hope you have a sufficient supply of face masks, and if not I encourage you to try a bit of DIY and make some from materials at home. Any kind of protection is better than none. And I hope everyone who scoffed at people wearing face masks finally learned their lesson and start to step up to do their part to prevent the spread. Sure, it may not completely prevent or eradicate exposure to COVID-19, but it helps.
Today’s Real Estate Reality
Let’s talk about real estate. The Toronto Regional Real Estate Board released March 2020 market stats a bit earlier than usually expected. The good thing about their report is that they split March in half. The first half being a ‘normal’ spring market March, and the latter half being COVID-19 March.
As I covered in an earlier blog post, sales were down post-COVID-19 hitting Ontario which was on or about March 15 and onward. And for the purpose of reading these stats, the COVID-19 period is March 15 and onward.
According to TRREB:
The first half of March 2020 saw 4,643 sales which made up 58% of all transactions, an increase of 49% compared to the first 14 days of March 2019.
The second half of March 2020 saw 3,369 sales, down 15.9% compared to the same period in March 2019.
My blog post covering March 21 to March 27 2020 saw 42% to 44% decreases in sales within the GTA.
Although listings were up in March 2020 as a whole, listings dropped in the last half of March by 18.4%
It’s not surprising that real estate sales are down. In fact, it is OKAY that sales are down. This tells us a lot of things. For one, most real estate agents are taking COVID-19 seriously and are properly advising their clients properly to prevent the spread. House showing appointments are down (as much as 60%+), public in-person open houses are prohibited, and the number of new listings are down immensely.
This is all okay.
The only buyers and sellers transacting in this market are the ones who absolutely need to sell or buy, which is why real estate is deemed an essential service.
There are homeowners right now who have sold their home perhaps even pre-COVID-19, and perhaps their closing is within the next few weeks… and they must buy a house to move into!
There are buyers looking for places who were perhaps renting, have made a commitment to buy a place for a valid reason, and must move.
There are renters who have been notified by their landlord that they need to find a new place to rent. They must also find a place to move into.
There are landlords whose tenants have left their rental property. They too must find a new tenant to rent their property to.
Real estate is an essential service — but at this time, it’s for those who essentially need real estate services. It is not for everyone. If you don’t need to sell your house now, please don’t list it on the market. If you don’t need to buy now, just stay put.
Will Real Estate Prices Fall?
TRREB’s report shows that the average price was up 14.5% for March as a whole when comparing 2020 to 2019. My initial research shows that although there is price movement, the average prices remain steady in many markets. This is a factor of supply and demand.
Quite simply put: we are NOT seeing a flood of new listings coming onto the market. And this is for obvious reasons. Some sellers are afraid of the kind of exposure they might get from buyers looking at their houses. How could they possibly prevent someone from COVID-19 coming in? (There are systems and processes in place, by the way, which I’ll talk about in another blog post.)
At the same time, buyers are cautious about looking at houses. They have to wear protective gear. They have to practice social and physical distancing from their own real estate agent. And many listings aren’t allowing physical showings to happen in the first place.
If very few listings are coming to the market, and fewer sales are happening as well, what does that mean?
It kinda suggests a somewhat balanced market, where supply is matching up with demand. This is of course an over-simplistic conclusion without having analyzed each and every neighbourhood within the GTA, but generally speaking, prices are ‘steady’ (for now) because of factors dealing with a steady supply, limited change in the inventory level, and a softer demand from homebuyers.
We’re all watching what’s going to happen to prices, but in a worse case scenario, even if prices drop across the entire GTA and you’re in a transaction that requires you to sell your property and buy another one, price becomes relative — you sell low, you buy low. If prices remain steady, this is also good news. Whenever you’re transacting in the same market, quite frankly, you’ll be fine.
The only way prices will drop right now is if we (a) start to see a huge influx of new listing inventory meaning homeowners deciding to list their homes in todays market (not that likely) or (b) if desperate home sellers start dropping their price due to an urgent need and motivation to sell because of their present situation. We are more likely to see B happening than A. And if B starts to happen a lot… prices can cool a bit.
The Future of Real Estate
I tell my colleagues that it took a global pandemic for the real estate industry to start ‘innovating’ in the way it conducts business. Up until the COVID-19 period started in Ontario, real estate agents were driving around chasing signatures on paper agreements of purchase and sale. They weren’t investing as much time in showcasing property using digital technologies and marketing strategies. They did a lot of public open houses. They were knocking on doors to get business.
Over the past few weeks, several major and long lasting changes happened in the industry, and it’s about time it did.
Electronic signatures replaced paper agreements of purchase and sale entirely because of social distancing. Physical in-person open houses were replaced by virtual open houses. Real estate agents are spending more on digital marketing to showcase houses virtually so buyers can see every nook and cranny through 3D modelling technology and virtual tours before even stepping foot into a house. Zoom meetings have become normal for home seller’s listing consultations, and even buyer consultations. Virtual buyer and seller (and even investor) seminars are happening everyday.
The future of real estate is here. And while I believe physical, belly-to-belly real estate interactions are still necessary once COVID-19 passes, many of the practices being done today will become the new normal. Real estate will be completely paperless. Clients no longer have to drive across town just to sign a piece of paper to finalize a real estate transaction. Real estate agents can educate their clients through a Zoom meeting before stepping foot into a house.
What does this mean for real estate agents? More efficient work, the ability to handle more real estate transactions without sacrificing service (because most of the time being spent was driving around in a car and handling the logistics of going from appointment to appointment), and a higher level of transparent service based on educating and empowering clients.
How about for buyers and sellers? It means even greater transparency by being able to learn more about a property and access more information before seeing it physically, an efficient offer process due to access to electronic signature and paperless platforms, and the ability to work with a real estate agent you want to work with, not just a gatekeeper of information.
This global pandemic is not something anybody would wish to happen. In fact I personally know colleagues whose family or loved ones were directly affected by COVID-19. But we can all agree that it certainly is an impetus for changes in the way business, education and life is handled on a daily basis.
Your Focus Right Now
Amidst everything that’s going on right now, focus on your health. Focus on your family. Focus on the people you love. Focus on your wellbeing.
It’s okay for things to slow down a bit. We need this time not only to protect ourselves, but also to grow and evolve.
Reach out to people you know and see if they’re okay.
Offer your help to your neighbours in a safe manner.
If you run a business, I hope you have reserves to carry you through this, but be confident knowing that the value you bring to your community will be needed once the ‘lights’ turn on again.
I don’t want to sound cliche, but I’ll say this anyway. We will make it through this together.
And in a few weeks, or months… who knows… we’ll look back and say “remember the time when…”
It’s just a matter of time.
But for now, spend your time on what’s most important to you.
And feel free to reach out to me if there’s anyway I can help you.