How is COVID-19 Impacting Real Estate in the Short and Long Term

As we feel the effects of dealing with the threat of COVID-19, we are also developing fears about a global recession and reduced purchasing power for consumers. The real estate industry has been impacted more than other sectors per se. It has been classified as an essential service, meaning that real estate agents must adjust their processes to reflect market performance as the pandemic evolves. This article provides a review of short and long-term impacts as a result of COVID-19 affecting the real estate market.

Short term

Spring is usually a record-breaking season and most prominent in Canada’s larger cities, like Vancouver. Sales rose 27% nationally in February; however, despite this strong start, market activity has slowed down as buyers are deciding to hold off on purchasing their homes as uncertain health conditions are impacting economic conditions. Sellers have seen good action in the later months of winter, so they are hesitant to accept lower offers during the pandemic.

There are still buyers and sellers that want to take action, and this includes people in more dire situations like needing to relocate for work or downsize/upsize quickly. Another factor affecting sales is employment and income circumstances changing due to COVID-19. For now, it seems that most are keeping at bay with their real estate decisions, or until the situation changes, then they will take action.

Agents are dealing with exceptional circumstances due to social distancing. They are unable to show homes face-to-face. Most companies have enforced virtual interactions, promising that technology is a bonus for high-level customer experience. It’s a different time. Agents are being forced to sacrifice a process they are most familiar with.

Long term

We don’t know how long we will face the threat of COVID-19. Still, it will continue to impact individuals, businesses and the market once things return to normal (if we can even say that ‘normal’ is attainable). But the reality of the market is, fundamentally, it won’t change. Buyer demand will increase as the supply of homes available for sale remains minimal. We can expect market activity to resume and recover once we’ve correctly assessed the health risks from COVID-19, and we start to see the financial markets stabilize. One thing’s for sure, with multiple directives coming from all levels of government, real estate sales will continue to be impacted by COVID-19.