The pandemic has altered nearly every type of activity in our lives, and the real estate business has seen some major changes as a result. Those changes could evolve as we begin to see people getting vaccinated from COVID-19 in the not-so-distant future.
We know that governments are not planning to make vaccinations mandatory for the general public. So much has been announced at both the federal and provincial levels. The reasons for making the process voluntary include the relatively limited amount of knowledge on the long-term safety of a vaccine, religious considerations, underlying health issues, and concerns about consent.
Those arguments may be enough to stifle a mandatory vaccine for the general public, but officials have also indicated that those who choose not to take the vaccine may find their ability to do certain activities limited. Those activities could include travel, attending, or participating in sporting events, concerts, etc.
The Ontario government has announced that there will be some type of documentation provided to those receiving the vaccine that could be used to show at places where it is required for entry.
How Covid-19 Has Affected Real Estate So Far
The pandemic has altered a number of things in the real estate business.
Near the start of the crisis, there was a lot of uncertainty as many businesses were closed or restricted.
That uncertainty made for a big drop in real estate activity, and a lot of contractual changes that attempted to deal with the potential closing of banks, supporting businesses and government services.
That drop in activity turned out to be short-lived, as the resumption of business in late spring turned into the busiest market of all time, even as we made other adjustments to adapt to allow trades to take place while respecting protocols to limit the risk of spreading the virus.
We have been conducting virtual showings for some time, along with expanded use of video and virtual tours. We also have expanded the use of digital signatures, and even do contact-free key transfers at closings.
Many listings currently have restrictions in place. Those may include singing off on health questions, wearing masks and gloves, sanitizing hands, not touching surfaces during showings, and not allowing children or extra family members inside homes. Some locations also prohibit open houses.
How a Vaccine Could Change Home Showings
As the general public becomes more vaccinated, and infection rates drop substantially, we will see a gradual relaxing of current protocols.
We will likely see open houses becoming allowed again, and many of the in-person meetings and showings being allowed without the safeguards that were put in place to prevent the spread.
It is possible, however, that we may see new listing restrictions such as requiring proof of vaccination from both buyer agents and prospective buyers before being able to view listings or open houses in person, should the sellers request it.
Would that be an unreasonable requirement? Not necessarily. Perhaps one of the residents has an underlying health condition that prevents them from getting vaccinated. Maybe they just don't want to risk having a potential carrier of COVID in their home.
What do you think about restricting people who don't wish to get vaccinated from attending at listings?
How a Vaccine Could Affect the Market
Aside from impacts on how we do business, the implementation of the vaccine will undoubtedly have an effect on the market itself.
In order to explore the future, it might help to review what happened to the GTA market, and Durham Region. As the pandemic unfolded around mid-March, we saw market activity drop off dramatically, with a quick drop in prices for those properties that sold in the latter half of March and early April.
As buyer confidence came back, we saw sales volume and prices jump to all-time record levels by July. Prices continued to climb in the GTA until autumn, with Durham continuing to set price records at least into November.
Interest rates have remained near all-time lows, with the Bank of Canada announcing that interest rates expected to remain near where they are until 2023.
Another key factor in the market since the market dipped in late spring is the shortage of listing inventory. New listings haven't been able to satiate the demand, and inventory levels are at near historic lows. As long as that continues, we should continue to see price increases.
In Toronto, we also saw a big drop in demand for condominium apartments. Part of this was due to the pandemic, and the perception of living with large numbers of people in the same buildings, having to share elevators and common spaces, etc.
It may have also had to do with the implementation of Airbnb by-laws restricting short-term rentals of condos. These factors combined have created a drop in demand for resale condos and also a substantial drop in rental rates in Toronto.
Heading into the new year, we have the vaccination program that should start to bring back consumer and business confidence as infection rates drop and restrictions start to relax. That should also help to bolster employment, which will help all economic sectors.
One area that is of great concern is how many people might be facing defaults on their mortgages and personal bankruptcies before the recovery. If it is a substantial number, there may be a flood of power of sale properties. I suspect that there wouldn't be enough to substantially quell demand.
With interest rates expected to remain low, combined with limited supply and a boost in consumer confidence, we may well see another very strong year ahead (continuing what has taken place since early summer of this year).
What do you think? Leave a comment below!