Real Estate & the COVID-19 Pandemic
As we all adjust to the unprecedented circumstances of our lives, I wanted to bring to you two main sources of information in this month’s article. The first is to give you an update on the real estate market both in broad strokes for the nation and more specifically for our acreage market here at home. Secondly, I will outline some important information on how we as realtors and the real estate industry in general has instituted procedures and guidelines to ensure the safety of all parties concerned during the selling and buying process. Real Estate is considered an essential service during this time as there will continue to be people buying and selling despite the pandemic.
First of all, here are the statistics I have pulled together that we have in hand for this year to the end of April as this publication goes to press in May. They are for acreages with homes.
You can see there has been a marked decline in both the number of sales and new listings for March and April 2020.
Normally March, April and May is the ‘acreage spring market. However, we could still see a heightened season of activity during the summer months and into early fall, hopefully as Covid case numbers decline and people are more confident to consider listing their properties and buyers become more active. Of course in this unprecedented time it is hard to predict what will actually happen but as some businesses are starting up in ‘new forms’ and with new protocols in place, real estate will likely pick up to a degree as well.
Here are a few examples of what national and local real estate industry analyzers are saying:
Canadian Real Estate Association (CREA): “The number of homes sold is in free fall, but so far average prices are not plummeting as sellers try to ride out the pandemic.
Canada’s residential real estate market plunged dramatically in April in particular, as the uncertainty surrounding COVID-19 pushed buyers and sellers to the sidelines. Home sales fell by more than 56 per cent from the previous month’s level, which makes the month the worst April for home sales since 1984.
Canada’s housing market is highly seasonal, as sales are generally low through the start of the year because of cold weather before heating up in the spring and through the summer. It then slows down again through the rest of the year before beginning the cycle again.
But the COVID-19 pandemic has thrown those trends out the window, as lockdowns and physical distancing measures have put a chill on home buying right as the market normally tends to heat up.”
Calgary Real Estate Board (CREB): “Due to COVID-19 impacts on Calgary’s housing market and general economy, it is not business as usual.
This year was projected to be a time when Calgary would start to see some modest improvements.
‘The uncertainty surrounding the COVID-19 pandemic and the energy industry are expected to cause a dramatic decline in housing demand over the second quarter,’ said CREB® chief economist Ann-Marie Lurie.
‘With social distancing expected to soften by the third quarter, the pace of the decline in sales will ease by the third and fourth quarter. However, a turnaround in sales is not expected by the end of the year, as the financial implications for many households will have lingering effects.’
At the same time, supply levels are also declining, as social distancing measures are causing some households to delay listing their home during the pandemic. In situations of rising unemployment rates and job loss, we can see rising inventory levels. However, the ability for households to defer their mortgage will help prevent a steeper rise in supply when social distancing measures are relaxed. This will help prevent home prices from collapsing.
However, given the situation in the energy sector, weakness in our economy is expected to persist beyond the immediate impact of COVID-19. On this basis, our housing market is expected to struggle with excess supply and further price declines. On an annual basis, prices in 2020 are expected to decline by nearly 3%.”
Predicting price drops for acreages here in our area is very challenging because of the variety of product and variables in land and property versus city homes. Personally I would not be surprised to see prices drop more than 3% this year for some acreage product. Values have been decreasing for the past several years anyway and the Covid Pandemic is yet another contributor in our ever changing Alberta economy and real estate environment. It is the new reality for Alberta and we all must face it and not have higher expectations than reasonable on our current values and harbouring false hope that things will return to historical stronger values.
One consideration worth noting for potential sellers, however, is that if one goes to market this summer, likely only ‘serious qualified buyers’ will be out looking and viewing property, so less ‘tire kicking’ so to speak, and sellers will also have limited competition because of fewer listings than normal. This should help your chances of a sale if your pricing is competitive. For much of the more expensive acreages pricing has been dropping for a few years now so our current challenge is adding further downward pressure. Acreages under $1M do seem to move out in reasonable timeframes.
Here is an outline of some of the precautions that are being taken within our industry to help you as potential sellers get more of a comfort level regarding the selling process in case you are holding back from listing thinking it is way too risky at this time to sell.
Realtors are committed to limiting the risk of Covid during showings of a seller’s listing by asking many questions of the showing agent and their clients about their current health condition through a questionnaire they must answer. The sellers also are asked questions about the current health of any of their family members and before any showings are asked to turn all lights on, open all inside doors and no-one be present during a showing. The buyer’s agent is asked to ensure he/she or their buyers to not touch anything during a showing, leave lights on when leaving and disinfect any door handles touched during a showing. The sellers are also encouraged to disinfect any door handles after a showing. Realtors are prohibited from showing anyone who they become aware of who has travelled in last 14 days or has come into contact with someone who has Covid. Agents and clients are to practice social distancing with agents and clients travelling in separate vehicles to a showing and exercise social distancing during a showing. Realtors are being asked to sanitize after opening and closing a lockbox.
Buyer’s agents are asked to encourage their buyers to do virtual home tours first to ensure the property they want to view meets most of their buying criteria, thereby reducing exploratory viewings of comparable properties which are not strong picks and thus reducing the seller’s exposure to unnecessary showings. We are also being more stringent in trying to ensure any buyers are properly qualified financially before viewing.
No doubt this is a time of caution, concern and uncertainty. But eventually we will arrive at some form of “new normal” and some real estate activity will continue. In the meantime, I want to express my sincere best wishes to readers that you are remaining safe and healthy as we all do our part to help reduce the spread of this virus.
Real Estate Agent