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.
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