As 2019 draws towards a close, one reality is as much one today as it was at this time this year, the end of 2018 – being a real estate agent in Canada is a challenging career, and one where wild changes in both market dynamics and the nature of the industry make this career choice one that’s more ideally suited for people who are resilient and versatile in the way they run a personal real estate corporation.
One challenge that may become easier over time – but still one for even the most experienced realtors – is generating clients in an environment where fewer and fewer people will qualify as prospective homebuyers, and particularly for detached single-family homes. Which, of course, is where a realtor will make the largest commissions on their services.
Here at Real Estate Leads, our paid online real estate lead generation service is an excellent resource for new realtors to be more directly put in touch with real people who are likely to make a move in the real estate market sometime soon. It’s a great means to get a leg up on the competition (and there’s a LOT of competition) and be put in touch with these people before your competitors have a chance to do the same thing.
Today we’re going to talk about 6 trends that are part of the forecast for real estate in Canada for 2020. While it’s true that success in real estate doesn’t require an ability to predict the future, having an idea where the market is heading is very helpful for making smart and prudent decisions.
The following trends paint a picture of a rapidly changing real estate environment where client realties, expectations, and what’s required of you as a realtor within all that is going to be changed quite significantly.
Property managers have discovered that they can exploit the sharing economy to drive rents for properties that were otherwise either vacant or failing to achieve the rent appreciation they needed to remain profitable. Many residential landlords are now considering using rental properties in the same way.
Nowadays, the majority of young city dwellers expect to have roommates anyways. If property owners and / or managers are able to provide this new generation of renters with what they’re looking for – furnished apartments, bigger shared spaces, quality Wi-Fi, and the company of people who are agreeable – landlords can then charge premium per-room rents.
This is increasingly the way young people are viewing the idea of living arrangements in areas of the country where overheated housing markets are making the old way of thinking about housing increasingly impractical. The idea here is that it builds community, plus it gives landlords a boost on rents that were going the wrong way for them. Last but not least, it gives people who rent the upside of having a much nicer and better quality place than they could ever afford on their own.
2. Climate Change Impacting New Builds Sales
There’s no debating the fact that changing environmental standards are now forcing developers to rethink and re-approach how they build their properties. We can know that the cost of doing so will only increase over the short-term, and quite likely increase substantially.
New regulations applied to receiving building permits is putting a lot of pressure on new development and new construction. This is increasing build costs in a big way, but houses have to built in ways that are receptive to the new realities and structural challenges that are being posed by climate change.
Higher prices for new product could put a damper on sales of pre-construction properties, but the built-in appreciation associated with such assets should still ensure that an investor will have paid far less than the going rate once delivery is made.
3. New Builds, Old News
The increasing cost of new product and the built-out status of many urban communities has made it so that developers must move further and further away from city centres. Buyers still desire new product with homes, but the longer and longer distances being placed between where they work and where they can afford to buy is creating a very unappealing situation. The industry expert prediction is that buyers will see less value in new builds if it is going to me an being locked into an exurb lifestyle that’s hours from where they would ideally live.
Anyone in the GTA or GVA will certainly know that people’s flight for affordability is pushing them as far as humanly possible from the city, and primarily because there’s nowhere else to build.
However, in Ontario and British Columbia – two provinces with surging populations – it’s safe to assume that there will always be folks willing to drive two-plus hours to work if it means they can get into the property market.
In Atlantic Canada it’s entirely different. There is still plenty of room to build within minutes of most cities in the easternmost parts of Canada.
4. Condos for Families
It’s fairly standard for investors to assume that a townhouse is the smallest property a family will be interested in renting. Not so, and especially for new arrivals from overseas who are perfectly okay with condos and seem them as a smarter affordable alternative to single-family properties.
These newcomers don’t have the same views as long-time Canadians about what a home’s supposed to be. For many of them, they didn’t come from having a lot of space, so 800 square feet or so is just fine for them and their children. And paying less rent is a big plus too.
Developers should put a lot of their investment into 2-bedroom condos near major metro areas, where the work is.
5. Prices on the Rise
We don’t have good news for those hoping for a slowdown in the price increases affecting major markets like Montreal, Toronto, Vancouver and Victoria. It’s just not going to happen; increased demand will keep pushing home prices higher. While there was a ‘flatness’ seen with prices in Vancouver and Toronto over the first half of 2019, that was really just a blip. Both homebuyers and investors looking for value will have to set their sights on less densely populated metro areas.
Industry reviewers also predicts noticeable price increases in Edmonton and Calgary. Based on recent government cuts and the downturn factors that are still battering the province’s oil sector, however, it’s not going to be a particularly marked increase in all likelihood.
6. Real Estate Agents Less of a Necessity
This part is not going to sound very good for anyone considering becoming a real estate agent in Canada. Technological advances and the increased desire of individuals to DIY (do it yourself) everything they can in the interest of saving a buck are really making huge dents in the viability of the industry for people like realtors.
Successful realtors will always know of ways to be successful in real estate, and they’ll always be around. But being one of them is going to be much more challenging in 2020 and beyond.
With buyers growing more confident in the data they have access to, paying a realtor to provide identical or very similar information will no longer be something they have to do – and especially so for new investors who may have never dealt with an agent before.
Self-acting buyers or sellers can learn more, do more, and understand more much more extensively than they could have 10 or 20 years ago. Back then you had to rely on a real estate agent for that. Nowadays, if the person is tech and industry savvy they may feel they don’t need a realtor working for them.
This is an ‘it is what it is’ type of scenario, but it’s not to say that you can’t be successful as a new realtor.
Getting off on the right foot in real estate is really important, and nothing does that better than building your client base and having clients buy or sell homes. 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 exclusively and for your own protected region of any city or town in Canada. You will be the only realtor serving that are via Real Estate Leads, and you’ll be the only realtor who receives our leads for as long as you continue to stay registered with us.
We’d like to conclude here by wishing all of you a very Merry Christmas, and extend those wishes to your families and friends too. We hope you enjoy the entirety of the Holiday Season!