KW Real Estate Market – insight into its current state with Covid-19
We are all experiencing anxiety because of the current state of the World. Fighting something invisible with potentially deadly consequences is something a lot of us only could imagine through fictional entertainment. And here we are – Living in a movie.
There are questions about how this is going to affect the economy. And how this is going to change the world. I don’t want to discuss how bad this can get – we’ve seen the movie and the media definitely is more interesting when portraying monsters rather than puppies. I think we can all imagine worst case scenarios. In reality, we don’t know how this is going to play out. The most prudent approach is to be cautious, analyze information as the facts are released and not overreact.
From a Sellers perspective:
The questions for those currently listed are centred around the spread of the Virus and how to safeguard against it. The answer is that to completely eliminate the risk of spread from others going through your home is to suspend the listing or not allow your home to be shown. To reduce the risk, Real Estate agents and their clients have implemented showing strategies that include only essential people at showings (no kids), sanitizer, gloves, and complete avoidance of touching surfaces by having all lights on and doors open before the showings with instructions to leave as is on exit. We have also implemented check lists for Buyer agents to ensure their higher risk Buyer clients be refused entry if they fail the questionnaire (those that have been out of the county in the last 14 days, those who feel sick, etc.).
There are also questions about whether it is a good to time to list. Some don’t have an option and need to sell while others can wait. We really don’t know how long this will last and it is still too early to know what affect this will have on price. We are still seeing showings happen and homes are still selling in multiple offers. The necessity for shelter is a driver in the Real Estate market – homes will continue to change hands. Traffic has slowed a bit and I don’t think a rise in prices will happen in this current environment, but prices aren’t falling, and the market is not dead.
From a Buyers perspective:
Is now a good time to start looking for a home or a good time to continue looking? Are we safe visiting properties? There are always Sellers putting their homes up for sale and the perfect home may just pop up. In fact, the perfect home may go up for sale and because of reduced traffic there may be less competition – this may actually be the perfect time – especially compared to the dash for homes we’ve experienced over the years. So, checking out current listings may bear fruit. And as long as you exercise caution when entering homes, the risk is minimal.
Mortgage rates are very good and banks are still lending. If you are a Buyer that has a 5+ year timeframe for settling in a home, then the risk is not huge. For investors that flip homes, hold timeframes are crucial as holding costs can kill margin quickly and depending on the market in 4-6 months the possible return is unknown.
From an Overall perspective:
Because of the utility dynamic of a home demand will not die. Those looking for a home rarely quit cold turkey and new Buyers are always entering the market. There is demand and quite possibly demand will increase in the background until there is clarity. This creates pent up demand that is just waiting for the go ahead. Given that supply will likely fall as Sellers hold off or maybe decide to stay put, this could cause an even greater rise in prices due to instant demand and low inventory as soon as things turn a corner for the better. We also may see Buyers from Toronto start looking in KW as supply shrinks in Toronto and because our prices may be a safer route than paying double for a home in the GTA.
There are other reasons that supply may be impacted: The large Condo developers may be running at a fraction of their build speed given the current environment: people off work and increased time dedicated to precautionary measures. As well because the City is shut down new building permits are not being granted because the City requires payment in person by cheque. This may cause a supply delay/shortage as well. In addition, investors that flip homes are staying away from the market as well – not buying anything until they get clarity: this will also cause fewer homes to be bought, renovated and put back on the market.
We are also seeing massive stimulus packages from Governments around the world. Bailouts and liquidity and cash. The world is working as one to get past this. To keep citizens safe and to prop up the economy. There is no tolerance for recession, and I have full confidence that we’ll get through.
Just some thoughts to end off on a positive note:
The current state of the world will be engrained in each and every one of us. This is going to change the world. The ability to carry on Business without interruption will be implemented across all industry regardless of whether we can leave our homes or not. B2B organizations will thrive that provide these types of tools. Those Business’ that provide online products and services that have exploded in the past decade are going to get even larger. Small business will evolve and get better by doing more with less. Our expectations will get reset. The fear and stress we are experiencing will drive people to innovate and to be better. Environments like this are opportunities.
I also want to touch on something more important than how big our houses are and how much money we have in our bank accounts. Our Planet’s health.
This shut down of the world may give us a window into how beautiful and resilient our planet truly is. Maybe the short reprieve from the constant onslaught of damage Humans do to the planet without acknowledging the consequences will come to light. We are seeing wild animals in places we haven’t seen them in years. Air pollution also seems to have been significantly reduced in some places where industry has slowed or halted. People are connecting with the outdoors – I’ve never seen so many people on family walks and people jogging. It seems we are healthier because of this. We have to listen to what our world is trying to tell us. If we continue to destroy our own home this will not be the last threat to our lives. My hope is that just like we have mobilized to socially distance, we can mobilize towards a sustainable path for our planet.