COVID-19 has wreaked havoc on more than the wedding season this spring. With the government enforcing stay-at-home orders for non-essential workers, implementing social distancing measures, and abstaining customers from visiting businesses, the coronavirus pandemic has changed the way we work, live, think, and consume.
It has had a profound impact on industries that rely on in-person interactions such as salons, restaurants, tourism, and entertainment. Fears of a global recession and job security has forced many to change their spending habits, becoming more frivolous and cautious.
Many industries are learning that they must adapt (and fast!) to meet the needs of the changing consumer in a new, socially distanced era. The real estate and mortgage industry is a prime example of one that has had to drastically adapt in order to operate as “business as usual.”
With virtual showings, drive-by appraisals, and remote signings, we have transformed the way homes are bought and sold. Now that the risks are subsiding and life is normalizing, we’re noticing new real estate trends emerging post-pandemic.
The Rise of the 905
Back in March, businesses were forced to shut their doors, digitize operations and allow employees to work remotely in a matter of days.
Many businesses are still not back to normal with larger companies suspending in-office operations for the remainder of 2020. Shopify recently announced they will move to a permanent remote-work model for most employees, keeping offices closed until at least 2021. Other companies are questioning whether they should re-open their offices at all.
It’s clear that the pandemic has disrupted the “9-5” office culture and could dramatically shift office norms for good. More Canadians are working remotely than they ever have before, sparking a new work-from-home movement across the country.
As a result, many homebuyers have different expectations for their next property due to being in lock-down for the past few months. The desire for more space and in-home amenities have impacted buying and selling decisions for Ontario homeowners.
According to Canadian Mortgage Trends:
- 28% said they want a bigger home, and/or more space and/or more amenities
- 25% want more outdoor space
- 8% want a smaller home
- 5% said they want a more practical or convenient layout
In a recent webinar, an economist for the LBS Economic Research and Strategy team forecasts that more people will consider the possibility of relocating to a new area code all together to satisfy these needs.
Condo dwellers who were once confined to their downtown condo to avoid the commute are now exploring other areas and considering properties away from the high-priced core. This could result in a new demand and favour the “905” area-code.
The Backyard Reno
Another emerging trend this spring is the backyard and home renovation. Many are weary of travelling this year and as a result have opted for a “staycation” instead. The homeowners who were once putting off home renovations for travelling or other experiences, have decided that this year, they’ll put their travel fund into their home this year.
Manzeel Patel, Mortgage Broker and Owner of Everything Mortgages states:
“During the pandemic we’ve been able to help many of our clients refinance. By leveraging existing equity in their homes, they have been able to do some much-needed home renovations. This not only gives them the opportunity to invest back into their home and appreciate the value of their property, but also design their home to better meet their needs.”
For growing families or young professionals who are working and vacationing at home this year, a renovation or amenity upgrade can be both financially savvy and emotionally satisfying for a summer stay-cation in the city.
During the pandemic, cottage travel was restricted. But that did not stop people from exploring a second property or even an investment property. Fresh air, land, water, and no air travel became more appealing to city dwellers during the lock-down.
We’ve seen a shift in perspectives from travelling to international destinations to investing in a second property for the future, or a cottage home that could offer enjoyment all year around.
For example, this professional couple decided to put their years of savings towards an investment property outside the city. When the pandemic hit, they both started working from home and decided that instead of waiting to purchase a $1.5 million property in Toronto, they would put their savings towards a “pandemic-escape plan.”
The couple decided to purchase a picture-perfect 3-bedroom cottage in Prince Edward County for $765,000 in case the virus got worse and had to flee the city. Now, with risks subsiding, the couple is keeping it as an investment property, enjoying the cottage life on weekends while still living in their condo in downtown Toronto.
As well, young professional couples who were planning to tie the knot this year are lot letting that money sit idly. Instead, they are reinvesting in Toronto real estate. COVID-19 is not stopping many of them from building their life together emotionally and financially.
This couple in their 30’s decided to put their wedding fund to good use. When they both started working from home during the lock-down, their 570-square foot condo started to feel incredibly small.
They used the market-slow down to their advantage. They sold their condo in Hamilton and used the funds from the sale of the condo along with their $45,000 wedding fund to purchase a 4-bedroom semi-detached in the Junction.
They did not have to withstand a heated bidding war and, in the end, purchased a property that will be the perfect starter home for their future family. Come closing in July, they plan to rent the top floor and some areas to truly transform the house into a home.
Spring 2020 Market Outlook
The spring real estate market was set for a record-breaking sales season. In February, Toronto and Vancouver home transactions rose by 45.6% and 44.9% respectively, indicating that the spring boom was beginning early this year.
The lack of new developments in urban centres would lead to more pressure on buyers this season. However, once the World Health Organization declared COVID-19 as a pandemic on March 11th, 2020, market activity slowed to a halt. Buyers decided to hold off amidst rocky economic conditions and sellers opting to wait until they can get higher offers as seen months prior.
There is still market activity with motivated buyers and sellers; with some sellers perhaps even more motivated to sell. For example, those who have already sold their homes and are in a time crunch to find a new one, professionals who are relocating for work, going through a divorce or those who need to downsize or up-size quickly.
Buyers may be more reluctant to make a home purchase in fear of losing their employment or personal savings. However, there are many stories of young families and professional couples who have used the market slowdown and low interest rates to upgrade their home, invest in a property or prepare for the future.
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