To say much has changed during the last month would be a huge understatement as the spread of the COVID-19 virus has risen to global pandemic proportions.
While the definition of “essential” business varies from province to province, in some provinces real estate services have been given the go-ahead to continue. However, given the intimate face-to-face nature of a real estate transaction, agents and brokerages will need to take drastic measures to continue to operate safely – it’s hardly business as usual as the need to socially distance and isolate must be a priority for all.
While initial recommendations included conducting business by virtual means – such as paperless documentation, video showings and the cancelling of all open houses – the most recent guidelines from provincial and municipal real estate boards are calling for agents to cease operations altogether, except in extreme circumstances when clients have an urgent need to complete a transaction.
For example, the Toronto Regional Real Estate Board says, “This was primarily to ensure people who had already bought or sold a home but are still in the process of finding a new home or selling their existing property, were not left in limbo during the provincial shutdown.”
Essentially, as long as the risk of COVID-19 pervades, buyers and sellers without an absolutely crucial need to be in the market won’t be, which will lead to a stark slowdown in activity just as the spring market was revving up.
While it’s impossible to determine how long sales could be affected, and there isn’t exactly a precedent for how this health crisis may play out, there is one economic event that could be comparable in how the housing market was affected – the 2008-2009 global recession.
According to analysis by Zoocasa, benchmark real estate prices dipped across the nation during this time period by eight per cent from $370,900 to $341,700. The drop was most pronounced in the Greater Vancouver area, which experienced a 14-per-cent decline, from $575,400 to $497,000. Losses were smallest in the Greater Toronto Area, down six per cent from $367,100 to $344,900.
However, these price declines didn’t become the norm – as any market watcher will tell you, the decade between the end of the aughts and the start of 2020 ushered in a period of astronomical price growth in Canada’s major cities. Canada-wide, home values have surged 75 per cent, from $362,300 to $634,300, while gains were even more pronounced in the largest urban centres. Vancouver home prices rose 82 per cent from $560,500 to today’s searing price tag of $1,020,600, while Toronto home prices were up a whopping 135 per cent from $359,500 to $846,100.
Check out the infographic to see how home prices trended across Canada during, and following, the 2008–2009 recession.