All posts for the month March, 2020

Which Property Segment is Most Vulnerable to the COVID-19 Economic Slowdown

Published March 31, 2020 by Real Estate Leads

Our blog entries for the last 2 weeks have made it very clear that we’ve been especially attuned to those of you expressing very real concerns about the health of the real estate industry in Canada in the face of the ongoing Global Covid Pandemic. It’s natural to have fears about it, and those fears certainly aren’t unfounded. There’s no debating that the economic downturn that’s already beginning in the face of the slowdown caused by the pandemic IS going to take a big bite of the real estate industry, but that’s only the not-so-good news

The ‘better’ news (we’ll still refrain from calling it good news given the current situation) is that the industry insider belief is that the residential real estate market is not going to be as negatively impacted as others. This should come as good news for realtors who have been lead to believe that home sales and the numbers of new homes coming onto the market are about to plummet in the biggest of ways. The similar belief is that there WILL be something of a longer-term dip, but residential homes sales are not where the biggest downturn is going to be seen.

How this breaks down for the individual realtor IS going to be that there’s less of the pie to go around, but in an ever-competitive profession that’s not anything new. Is it going to be worse than usual? Sure, it is. Is it going to be permanent? No, it’s not. However, a realtor’s ability to be infusing his or her business with new clients is going to be even more challenging than it always has been. Here at Real Estate Leads, our online real estate lead generation system for realtors goes a long way towards helping you get more out of your efforts there.

But back to topic – if it’s not residential real estate where the sting of the economic downturn is going to be most felt, where is it?

Commercial Property Markets Always More Easily Swayed by Economic Cycles

Yes, there’s your answer; it’s going to be the commercial real estate market that’s most prominently affected by the fallout of COVID-19. Commercial property is particularly vulnerable to economic shocks like the ones that are already being brought about by the spread of COVID-19.

In ways that don’t apply to residential real estate, commercial properties like factories, retail stores and office units are much more exposed to economic cycles. Then you have to weight in the fact that commercial property owners and real estate investment trusts already pay higher interest rates for borrowed capital.

Then there’s also the role of the tenant in making this situation what it is. Tenants are almost always leasers with a commercial property, and the relevance of that in endangering and depressing the commercial real estate market is – quite plainly – risk. Tenants are much more likely to be exposed in comparison to a new owner of a residential property with dwelling, as they’re more prone to economic collapse leaving them with no choice but to fall into a default on the property.

If we read the news these days it will be hard to not see all the shops and offices that are shut due to the national health crisis. This is a very poignant and real example of how commercial property is much more vulnerable to these types of events.  If the outbreak creates deeper dents in the economy, things will become worse – MUCH worse – for commercial properties as compared to residential ones.

Most realtors should know what a REIT is. It’s a fact that if the shutdown lasts longer than expected, things could get worse and especially for Real Estate Investment Trusts where there becomes a very unappealing need to cut dividends and mark down the value of the real estate assets.

Informed investors are of course going to be entirely aware of these risks, and that’s why it’s these buyers who will be inclined to to sit back and wait this out before making their real estate move. The risk is significantly greater for them than a residential property buyer, although of course there are still increased risks there too.

Just not to nearly the same extent, and that’s something that should be reassuring to real estate agents working in Canada.

Here in BC one part of the $5 billion federal package being offered to help companies survive the economic shocks from the outbreak is an assistance program for reduced property tax for commercial real estate. It’s estimated that relief tax savings for the average urban commercial property owner is going to be about $4,000. The idea then being these savings will flow through to tenants who have triple-net leases and then providing support to them as well.

This is going to be a tumultuous time in real estate, but anyone predicting a massive collapse in the real estate industry fuelled by precipitous drops in transactions for residential properties is misunderstanding the way this is very likely going to play out.

Canadian Real Estate Market Only Expected to be Mildly Affected by COVID-19 Pandemic

Published March 16, 2020 by Real Estate Leads

As we reach the middle of March 2020 beginning this week, the intensity of the concern related to the Global COVID-19 Coronavirus pandemic is soaring to new heights. There has been extensive talk about how it may promote a severe economic downturn, and in a worst case scenario it could trigger a global economic recession. Whether that actually happens or how long it would last if id did remains to be seen, but one thing’s for sure – this pandemic is pretty much turning our world on its head.

Interestingly enough, the same sort of global capitalism that has allowed the virus to jump all over the world with lightning quickness is the same global capitalism that’s worked to make housing unaffordable for many Canadians. Led by a Liberal Government who’s only interest is protecting the economy by any available means, the infusion of foreign capital into Canada’s housing market has been ‘okayed’ as a means of propping up an economy that – as is the case with every federal Liberal government – suffers from being hopelessly bloated with social expenditure.

Realtors have fewer prospective clients as a result of part of this (not all), and as such it’s more difficult for new realtors to enjoy the flow of new clients that those coming before them did. Here at Real Estate Leads, our online real estate lead generation system in Canada is an excellent way for those realtors to enjoy the power of Internet marketing as means of having themselves put more directly in touch with people who are genuinely considering buying or selling a home.

The good news is that it appears the appetite for buying and selling homes in Canada won’t be too overly affected by the Coronavirus pandemic. Let’s now look at that in greater detail.

Projected Modest Impact

The industry consensus seems to be that the impact of the new coronavirus on Canadian real estate is going to be ‘modest’ and ‘temporary’. These same industry experts are stressing that while we don’t know how the coronavirus outbreak will be resolved, data suggests that panic moves will only worsen the country’s economic situation. In fact, if you’re a Canadian real estate investor, this may represent a buying opportunity for investors and it may lead to a positive lift in rental and housing markets.

It’s good to keep in mind that, generally speaking, disruptions in GDP growth rates can affect real estate markets within an 18-month period. We’re know really seeing how fear and concern surrounding the coronavirus is impacting trade, travel, tourism and the Canadian economy, but we should know that it’s almost certainly not going to be as bad as some of the extremes being predicted.

Much like what happened to SARS in 2003, fear and panic are going to be the biggest threats to the country’s economic and real estate outlook. It is true that when disruptions in GDP growth rates are seen they usually do affect real estate markets within an 18-month period. One positive out of this may be that the result is a positive lift in rental and housing markets seen some 18 to 24 months after GDP fully recovers.

Immediate Cool Down / Long-Term Lifting

Canadian real estate may be cooling down in response to COVID-19, but the expectation is it is only going be temporary. After, as stated, it may actually see a jump in the big picture. What will be factoring into that?

  • Temporary, small decrease in GDP growth
  • Increased immigration
  • Increased foreign capital
  • Increased demand
  • Increased property values resulting from above 4

Analysis shows potential short-term impact to Canada’s economy including:

  • Canadian GDP remains forecasted at 3.3%, factoring in a -0.1% coronavirus hit
  • Slight decrease in oil prices
  • Stifled commodity prices
  • Disrupted industry supply chains
  • Slowdown in business sales
  • Decline in international travel to Canada

Everyone hopes the outbreak is contained, and that health and economic impacts are limited. When the situation normalizes, an influx of Chinese immigrants and capital to Canada resulting in increased demand for real estate is probably going to revitalize the market.

Like most people, we believe that Canadian real estate will see an immediate cool down with long-term lift due to a temporary, small decrease in GDP growth, followed by increased immigration, increased foreign capital and increased demand, leading to increased property values.

Do these factor represent a greater number of good buying opportunities now? Yes they do, and if you’re working with investor buyers this is something to discuss with them.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivery exclusively to you – and only you – as the only realtor serving that particular region of any city or town in Canada. Once you signed up and claimed that region, it’s yours exclusively for the entire time you maintain your membership with us. It’s an excellent way to get the very most out of your client prospecting efforts.

Major Property Tax Increases Cool Investor Enthusiasm in Vancouver’s Resurgent Market

Published March 9, 2020 by Real Estate Leads

It certainly doesn’t take a rocket scientist – or a realtor – to understand why the housing markets of Vancouver and Toronto make the most sense for investors with pockets deep enough to actually be ABLE to invest in properties there. The basics of supply and demand in both locations and the fact that demand will always outstrip supply means a very likely increase in the return on that investment. If you’re a realtor working in these major metro areas then you’ll almost certainly be working with investor buyers at least somewhat regularly. If you’re a new realtor then you should be quite enthused if the opportunity to work with one such buyer, and in much the same way you’d be to be putting a family into a much-needed home that suits them well. Here at Real Estate Leads, our online real estate lead generation system is designed more to generate leads made up of clients who are looking to buy homes to live in, along with others selling homes and indifferent to whether that home will be a principal residence or a rental. As a new realtor, you’ll be in a position to benefit greatly from using it.

One of the things that’s been very front and center in the news in Vancouver these days is the sharp rise in property taxes approved by city council recently.  On the first day of this new decade, the City of Vancouver implemented a shockingly large 7 percent increase to local property taxes, which works out to about nearly double the 10-year average. This tax hike was and continuous to be contentious, and the primary reason that it goes far beyond the rate of inflation.

When you consider that the original suggest rise was 8.2%, it definitely makes you go ‘wow’ and wonder what the logic is in doing this to a city where families are stretched so thin financially as it is. However, we must remember that the NDP is currently in power and this discretion-less spending has always been a party of that party and the way they conduct themselves.

Tough on Existing and Would-Be Investors

Real estate investors in Vancouver have already been bearing the brunt of the Province’s speculation and empty property taxes put into place over the past two years, and this property tax spike likely isn’t going to sit well with them for that very reason.

In an interview with local media recently, a well established Vancouver realtor stated that while he understands the municipal government needs money, this is one hundred percent working against the interests of affordable housing. There is absolutely a belief among those who work in industries related to the housing market that this dramatic jump in property taxes is another example of government tinkering with Vancouver’s painfully tight housing market to curb demand.

Real estate professionals and economists will agree on one thing – this type of ‘reactionary’ response is yet another example of Government missing the mark in how to address the housing crisis while still protecting the health and vibrancy of a market that – like all of them – function best when left to their own dynamics.

Discouraging Investment

There’s no getting around the fact that higher taxes will certainly discourage investment into the city, but realtors can still assure investors they may be working with that if they choose to purchase in Vancouver they will still make long-game profits, but perhaps not on the monthly cash-flow basis that they were expecting.

The bigger picture reality in all of this is also one you’ll be hard pressed to find a single realtor or economist ready to disagree with; when you have a situation of dramatically restricted supply, and the process of releasing more supply is highly politicized, and you then ADD ever increasing demand in the form of a growing economy and a growing population because of immigration, what do you think is going to happen? That’s right – prices are going to go up. By increasing property taxes, there’s no way you’re going to get around this and where it gets people the most is with those who are renting homes.

It is absurd to think a property owner is going to have those increased property taxes coming out of their bottom line. It is going to be absorbed by the renter, and this further diminishes that person’s ability to save up for a down payment to actually enter the housing market in the future.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you – and ONLY you – as the ONLY realtor serving a particular region of any city or town in Canada. Once you’ve claimed that region (act fast – they are going all the time!) then you’ll be the only realtor to receive leads for it for as long as you continue your membership with Real Estate Leads It’s an excellent way to really power up for you client prospecting efforts and enjoy a bit of the power of the Internet in getting better results from them.

5 Current Trends for Homebuyers in North America

Published March 3, 2020 by Real Estate Leads

Every time you read something like this you have to keep in mind that America has 10x the population that we do in Canada. That means much larger sample sizes and perhaps not exactly the same reflection of what our buyer prerogatives will be for people here in Canada, but most in the industry will agree that these current trends for homebuyers very likely are accurate representations of the same one in Canada. One things for sure is the new dynamic for homebuyers is not one of a classic young family buying a detached home in or just outside town like it was until 20 years ago or so. And speaking of that huge population differential, realtors in Canada who are finding the business to be especially competitive can imagine what it must be like to be one of the ones plying the same trade down south. Real estate is a competitive business all over North America, however, and especially so for realtors who are new to the business and striving to establish themselves. Here at Real Estate Leads, our online real estate lead generation system is an excellent way for these men and women to get more out of their efforts to find and retain clients.

But back to the topic for today, one of the most important aspects for the development of new realtors is to learn what it takes to be entirely top of the real estate world and dialed into the changing wants of who are the majority of buyers these days. What are these 5 current trends for homebuyers being seen nowadays?

  1. Millennials have higher standards for their first home, as they foresee the need to stay in 1st homes longer than previous generations of home buyers

A recent survey in the US found that 36% of millennial-aged respondents look for a home they can stay in for 10 years or longer. The previous ‘starter home’ ideal is not realistic anymore, as housing market dynamics in many big metro areas make upward mobility in the real estate market less of a sure thing. It added further that 42% of millennials would like to start with some semblance of what they’d consider their dream home.

2.  People Have Never Been in Less of a Rush to Find & Buy Homes

The average amount of time first-time buyers spend looking for a home has jumped from three months to five. For repeat-buyers it’s even more – from 2.5 months to four months. Buyers of course utilize the web as their primary search means. Yes, that expands their house hunting capabilities but it also takes more time. It shouldn’t come as a surprise that more people are also doing extensive online research before buying a home.

3.  Buyers are Less Enthusiastic about ‘Fixer Uppers’

It wasn’t that long ago that homes with flaws that could be remedied with a little hard work, and then sold for a much better price or lived in much more satisfyingly. An affordable home that needed repairs would usually be sold fairly quickly.

For whatever reason, it now seems that fewer and fewer buyers are going to be agreeable to doing this. People want to be able to move in and not have work to do on the house.

4.  Kitchens Remain a Main Attraction for most Homes

This has been the reality for as long as anyone can remember, but nowadays it’s as prominent as ever. A home with the perfect kitchen is a priority for a lot of would-be buyers. They may want islands, room for seating, double ovens, functionality, cabinets, and so on. Apparently 66% of respondents to the survey chose a state-of-the-art kitchen as their top priority.

  • Homes Should Remain a Good Investment

The last of these is another relation to the millennial age group, many of whom are looking to buy their first home some time in the near future. Another trend among them is they want their home to be a good investment. The report indicated that 30% to 40% of millennials do see home ownership as a sign of success.

Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that will be delivered to only one realtor – you. That’s right, you get to claim your very own region of any city or town in Canada (provided that locale hasn’t been claimed already – act fast!) and then you’ll receive every lead generated for it. You’ll quickly come to see it as a good investment in the success and growth of your personal real estate corporation and you’ll enjoy how it puts you directly in touch with genuine potential home sellers or home buyers.