COVID-19 (Coronavirus) Affects on Vancouver Real Estate
The Coronavirus and Real Estate
Written By: Mariko Baerg, REALTOR of Bridgewell Real Estate Group
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As the Coronavirus (COVID-19) spreads and the World Health Organization has declared it a global pandemic, we are left wondering how this will impact the Vancouver housing market.
I have been receiving a lot of questions regarding the impact of the Coronavirus market turmoil and Vancouver real estate market, and while I don’t know exactly what will happen as a result of the virus, what I can tell you is that I’m watching things very closely.
I’ve put together some important considerations on mortgage payments, interest rates, low inventory, impacting prices, and showing/open house protocol amidst the coronavirus.
Keep reading for my observations and thoughts on real estate outcomes amidst and following the COVID-19 outbreak.
Tues March 17 update above
Thurs March 19 update below
The fear of spread has led policy makers to encourage disengagement from economic activity and tourism. Gatherings of people are being regulated, cruise ships have been suspended until July, and recommendations have been made to avoid restaurants, organized events and travel. All of these things make society function and drives consumer spending, and without customers many businesses and industries in Vancouver will see a significant decline in revenues which may force layoffs.
Remember, one mans spending is another mans income.
We live in interesting times, and have just recently seen the biggest decline in the stock market since 2008. There’s no doubt that we should be concerned about the state of our economy; specifically since Vancouver has a large tourism industry that has already been hit hard and will affect the city as a whole.
In addition to restrictions on tourism and gatherings, BC Health officials have announced that anyone who travels abroad, including the US, should stay at home from work or school for 14 days upon their return to our province. This will unfortunately result in a hit to incomes, which is why we see so many cases of people that are sick continuing to go in to work – servicing debts becomes increasingly difficult on quarantine or layoff.
So far, the plunge in yields has cheapened mortgage rates, no doubt providing a temporary lift for Real Estate. However, this is not something that can be fixed by lowering interest rates. To worsen the matter, even pre-COVID19 Canadian households were shown to have the lowest savings rate since the 1960s and an increasing debt load.
And so, this leaves us thinking about the tenants who can’t pay their rent, or the business owner, employee, or millions of Canadians that cannot service the $1.56 trillion in mortgage debt in addition to credit lines, credit cards, cost of utilities, and more. What options do you have to hold or skip a mortgage? Will the government step in and cut a cheque for every resident like Hong Kong, give a moratorium on mortgage payments or evictions for residents who can’t pay due to loss of income resulting from the coronavirus?
There is no doubting that we are finding ourselves in unprecedented times. If you find yourself in the position that you are to be self-isolated, quarantined, or need help with your mortgage payments please reach out directly to your lender.
Federal and Provincial Governments have been announcing support measures that will be put in place to assist Canadians, should their employment income be negatively impacted as a result of the COVID-19 fall out. While there is no specific remedy that all lenders are offering at this time and although their abilities to assist will differ, the level of assistance they will provide will be measured on a case by case basis and lenders have been coming out with their own statements addressing their commitment to help.
Some of the remedies borrowers may be able to seek are, but not limited to, the following:
- Deferred payments for up to 6 months
- Increased amortization to lower payments
- Miss a payment
- Specialized payments
Most lenders have options available to skip a payment or put a hold on a payment for your primary residence, but many are still working on how they will handle deferring payments for investment properties.
Here are some direct contact numbers for the various lenders:
|Bank of Montreal||1-877-895-3278|
|First Calgary Financial||403-736-4000|
Starting with 4
Starting with 6
Starting with 7, 8 or 9
|Street Capital||See RFA|
Coronavirus and real estate prices
On the other hand, the housing market was significantly picking up pre-COVID19 and prices have been on the rise for all types of properties since November 2019. As I’ve mentioned in other blogs and vlogs, we are starting to see multiple offers again and I’ve even ran in to some subject free bidding wars. In the midst of COVID-19 interest rates have come down and the Bank of Canada has cut the overnight rate. This shift, in addition to loosening up the stress test rules pre-COVID19, has improved the accessibility to mortgage financing.
Inventory has remained low since last year, which is part of the reason as to why we are seeing an upswing in prices. There was also a lot of speculation that we were at the bottom of the market in Q4, which brought in buyers that were on the side-lines thus fuelling demand.
However, with many buyers’ funds tied in to the stock market many are reluctant to pull their funds out. While I don’t currently see the real estate prices or demand being affected (based on opens I’ve been to, multiple offers, etc. this week), there may be a lag in prices and the coronavirus pandemic may cause a setback in the demand of the real estate market due to reluctance to pull funds that have taken a huge hit.
Overall I would think that, yes, the coronavirus is a threat to the real estate market. It should be temporary though; 2021 should have better economic outcomes. I do believe that there is a strong media influence, and that once cases start to decline after a few months and the virus’ effects on the supply chain and consumer spending in public places are felt less, things should pick up. Most people expect this to happen by the second half of 2020. There may even be a rebound of the market.
Many open houses and presentation centres are closed
Coronavirus will likely keep the inventory low, and I’m already starting to see people cancel open houses due to COVID-19 and switch to appointment only. With that being said, I was out for open houses last weekend (March 14/15, 2020) with jam-packed numbers and there are still many scrambling to get in to open houses this weekend. While the threat is real, there are still a number of motivated buyers in the market right now that are not going to be stopped in viewing homes due to the coronavirus.
Presentation centres for new developments have been sending out emails saying that they are switching to appointment only and that the show homes are closing amidst the breakout.
Most realtors are implementing policies that any open house visitors are required to sign in upon entry so that should there be an outbreak at one of our locations they can identify all those that have visited our premises.
Luckily for us, we provide all of our sellers with professional photography, floor plans, and virtual tours; which means that the buyers can view unseen in the worst case scenario!
While we do still have sellers showing and buyers viewing, it’s important to still have a safety first mentality. We are providing our clients and recommending to other realtors to:
- Have a sanitation station set up at the entrance of the home and encourage visitors to use the available items. Stock sanitizing gel, masks, disinfecting wipes, tissues, bottled water and silicone gloves.
- If you are taking buyer clients out to visit homes, consider bringing a COVID-19 Safety Kit. This kit could consist of sanitizing gel, disinfecting wipes, tissues, bottled water, masks and silicone gloves. Ensure these items are readily available when entering and leaving the home during your visits.
- If you or your clients are sick, quarantined, have travelled internationally of late, or if there is a possibility of COVID-19 exposure – stay home. This is an obvious one but it does need to be said. Sometimes people think, “I’m fine”, or “It’s just in my head.” During moments of crisis, there should never be a ‘roll the dice’ attitude. Take the time to ensure your clients are educated on whether or not they could be at risk.
- Continue to monitor the situation and make adjustments to your plan as news is released. We have seen that drastic changes can happen daily and what is appropriate today may not work tomorrow.
Update: March 22, 2020 – RECBC announces strong recommendation not to hold open houses. “Ban” has been put in place where REBGV will no longer allow advertisement of open houses on MLS or public real estate sites. In addition, the Real Estate Errors and Omissions Insurance Corpor
We strive to keep our clients up to date with real estate news, and are always keeping a pulse on the market so that we can properly advise home buyers and sellers. If you’re considering buying or selling right now, start a conversation by calling 604-765-0376. Prefer text? 604-319-0200 or email [email protected]. We’re here to help.
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