Change is constant in nearly everything in life, and even though the real estate industry in Canada can be a real rollercoaster it’s the way it needs to be to ensure continuing volatility. Being tied to the economic prosperity of the country and those who work hard enough within it to be homeowners is never going to change, but here in the middle of 2020 we’re seeing how a virus can produce wholesale shifts in the buyer and seller prerogatives of people who are active in the real estate market.
Much has already been made of the way the condo market in places like Vancouver and Toronto has really sagged over the last half a year. There’s a whole lot of factors going into that, and the good news is that we’re already seeing how lower prices on new condominiums resulting from overstretched investor buyers is creating a first time homebuyer benefit for people who DO want to live in the city.
Now of course being on top of these trends and all the ripples that come with them is part of what makes for a good and knowledgeable real estate agent, and ones who are new to real estate in Canada might have more of a reason to focus their efforts on the condo market if they are working in the major metro areas. That may be the smart move given what we’re seeing with dropping condo prices making more young people into potential buyers.
What’s also always a smart move is taking advantage of anything that creates the opportunity for you to grow your client base. Here at Real Estate Leads, our online real estate lead generation system for Canadian realtors is an excellent way to put the power on Internet marketing to work for you to put you more directly in touch with home buyers and sellers who are genuinely considering making a move in the local real estate market.
But back to topic – it’s important to look at this condo surplus / lower prices trends from a bigger-picture perspective, so let’s do that.
Increased Premium on Space
On the things the pandemic lockdown made clear for many people is that being in 600 or so square feet for extended periods of time can really put your mental wellness to the test. Another aspect that’s souring people on condo living downtown is the way these areas are increasingly dirty, congested, and crippled with increasingly criminal activity following decades of a ‘soft on crime’ model as created by successive federal governments.
Many people are not speaking to a real estate agent about making a move to more suburban areas where they can have some space and perhaps even a yard or rooftop patio – if they can afford to do that. Typically that’s been increasingly possible as good numbers of people who owned these properties in the ‘burbs ‘downsized’ once they retired and made some money selling the home and moving into the condo just the two of them.
Long story short, that’s not happening as much as it used to, as people put off selling their detached home or townhome for two reasons:
- The market being down overall due to the COVID freeze that has yet to thaw entirely, with many apprehensive buyers and others who can’t afford the prices these owners would like to get for their homes. It’s entirely natural for homeowners to postpone putting their home on the market until it’s more favourable for them.
- These same folks who HAVE yards and space are now hesitant to trade that in for a box in the sky if these sorts of measures are going to become commonplace in the future. They have a new found appreciation for the space their current home affords them, and they’re not going to be convinced to part with that in the interest of making some profit and downsizing to a smaller place quite like they used to consider it.
Now to be fair the effect of this can go both ways depending on other market factors contributing. Around larger urban areas it may be that some detached homes or townhomes that ARE put on the market will be able to get asking price based on simply demand far exceeding supply.
In other areas of the country, however, it’s not likely to be the same. The ‘downsizing’ segment of the market isn’t going to be as affected, but then again in these areas these same people likely won’t be downsizing to condos and the like the same way – because there are few of them to begin with!
Likely Long-Term Trend
While we can look forward to the Global Pandemic and everything that’s associated with it eventually passing, there have been a number of social scientists who say the way it’s changed people’s thinking is probably here to stay. People are seeing the appeal of getting out of cities like never before, and while that’s great for realtors in rural areas of Canada and to a lesser extent in ‘satellite’ cities, it’s not as good for those working in metro areas.
Sure, more condos will sell but they may well sell for way less than they would have a year ago, and then there’s the fact that a lot of condo owners who would sell after buying the homes of ‘downsizers’ won’t have the opportunity to do so because those owners aren’t selling.
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