As COVID 19 loses some momentum and with businesses starting to re-open allowing us to get back to some sense of normalcy, the big question on the mind of many is the longer term impact the virus will have on our economy and in particular the real estate market. As businesses re-open and people are called back to work, their incomes restored and life regains the normal pattern we are used to, the question that perhaps needs to be asked regarding real estate is “Is it Safe To Go Back In The Water?”
As noted in my prior posts, real estate activity in the Southern Georgian Bay market and indeed across Canada took a sharp decline starting mid-March and particularly in April when MLS® dollar and unit sales fell by over 60% from the same time last year. That “free fall” slowed in May when sales declined a more modest 34%. Through this time frame, my analysis of the market reflects that pricing to this point in time has not been adversely affected. Through the first 5 months of 2019 the average list-to-sale price ratio for all properties sold through the MLS® System of the Southern Georgian Bay Association of REALTORS® (SGBAR) was just over 97% and in 2020 that number has changed only slightly and is still above 97%.
A couple of months ago I made the comment that real estate in the Southern Georgian Bay regions was no less attractive or any less desirable now than it was prior to the arrival of the virus. As we recover from the the affects of COVID 19, my colleagues and I are finding that more and people are looking at this area as a safe haven. A place to move in order to escape larger urban areas such as the Greater Toronto Area (GTA) with growing populations. long commutes to work and higher real estate pricing. On top of that we also have a very attractive lifestyle here that is hard to duplicated anywhere in the province if not across Canada.
Further, the past few months have served to illustrate to both individuals and companies that people can quite effectively work from home. For companies of all sizes it begs the question, do we need this expensive office space, rented or owned to successfully run our business or are there other options? I believe the answer for many companies asking this question is no and the real estate profession is a good example. More and more, real estate Brokerages are reducing their office space with fewer private or smaller offices and more cubicles along with an increasing number of their Salespersons or Brokers working from home as technology allows us to do that. I am in my home office as I write this and so is my wife.
As we emerge from COVID 19 many questions will need to be answered and only time will tell if the economies of Canada, the United States and other countries will be adversely affected over the longer term. We are not in a recession, at least not yet. Rather it’s a global pandemic the likes of which many of us have never experienced. One thing is certain and this has essentially never changed. Real estate consumers will want and need qualified knowledge from REALTORS® to advise and guide them through the market especially in these changes times. It’s our fundamental role to assist consumers with their real estate buying and selling needs. Even though I am a real estate Broker, I too am a consumer. Through my lifetime and before entering real estate I bought and sold eight homes including one in the U.S. Just like one of the titles in Clint Eastwood’s spaghetti westerns, I have dealt with all types of REALTORS®, “The Good, The Bad and The Ugly”. Our profession is often criticised and rightly so. For that reason I have always strived to render the best possible real estate service I can to my valued clients.
While interest rates remain low, lenders are being very cautious and rightly so. Between real estate, vehicles, lines of credit etc. Canadians have a great deal of consumer debt. We need not be critical of our provincial and federal governments spending money like drunken sailors whether its to buy our way out of COVID 19 or with other spending. Canadian consumers have done their share of spending and sooner or later you must pay the Piper. Too many home buyers got caught up in the frantic real estate buying years of 2016, 2017 and 2018. Low mortgage rates allowed people the opportunity and gave them the confidence to spend more money on a home than perhaps they should. That coupled with multiple offers and a belief that the real estate boom would never end has in my opinion made it easy for consumers to buy more house than they need or can afford. Only time will tell if I am wrong or not but as with the sport of surfing, you can only ride the crest of the wave for so long.
As always please feel free to Contact Me with your questions or comments, we are all in this together.