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What the coronavirus means for Canadian real estate

What the coronavirus means for Canadian real estate

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What the coronavirus means for Canadian real estate

The Canadian economy and real estate markets might not be able to escape the affects of the global coronavirus outbreak, but strong underlying fundamentals will return prosperity in the longer term.

This is among the findings of a new study from the Real Estate Investment Network (REIN), a Canadian real estate education and research firm whose members have transacted more than 39,300 properties worth more than $5.1 billion.

 

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According to the REIN Special Report: The Coronavirus’ Impact on Canadian Real Estate, Canadian real estate will see an immediate cool-down, but a long-term lift, due to:

  • Temporary, small decrease in GDP growth
  • Increased immigration
  • Increased foreign capital
  • Increased demand
  • Leading to increased property values

These factors represent a buying opportunity now, REIN says.

Following is an edited version of the report.

There is some good news

Looking at the numbers, the future may not look especially bright, but there are also signs of hope. Take, for instance, the fact that China recently closed its last temporary coronavirus hospital because there aren’t enough new cases to support its operations. Apple has reopened all of its 42 stores across China, and the number of new cases in South Korea is on a steady decline.

Recession may be unavoidable

Earlier economic forecasts originally saw the impact of coronavirus as “modest and temporary,” at worst. But as more stringent containment measures are placed and oil price shocks take hold, the impact may be greater and may last longer than initially anticipated. Stalled exports to affected countries are set to negatively affect the country’s quarterly growth.

According to experts, the oil price shock, coupled with supply disruptions, could tip the Canadian economy into recession this year.

Nevertheless, the same report suggests that the economy is bound for a sharp recovery once the virus is contained, stimulus kicks in and pent-up market demand boosts the economy upward once again.

In current conditions, the economic implications of COVID-19 will be driven by a decline in land and international travel, along with the unprecedented oil price shock and disruptions to industry supply chains. The implications of policies, changes and impacts are numerous.

Short-term impacts on real estate

This will depend on quickly changing information and resulting policies as they unfold.

Medium-term impacts on real estate

A decline in GDP growth may impair the rental and property markets in 18 to 24 months. However, this is a unique situation and the velocity of the changing situation and responses could compress outcomes and timeframes rapidly.

Longer-term impacts on real estate

Demand for Canadian real estate will likely have a positive lift resulting from increased demand, rental shortages, demographics, immigration policies, and Canada’s position as a relatively safer harbour for capital, including foreign investment.

While there are travel restrictions in place, existing immigration policies have not yet been altered. The Canadian Federal government supports a continued upsurge in immigrant populations in the next few years. Once the outbreak is contained and the dust settles, we can postulate an increase in demand for migration to Canada, particularly from China and other Asian countries. This could then increase demand for both rentals and ownership properties, providing a further lift to real estate markets.

Post-coronavirus Canada can also mean a haven for foreign capital. All things being equal, it’s possible that post-coronavirus foreign capital becomes increasingly directed to international property investments, further boosting rental and property markets in the process.

Historically speaking, real estate tends to be a very stable asset class, even in times of turbulence. While current market conditions may not be the most conducive for purchasing properties at the moment, it is best for real estate investors to use this time to position themselves in a place where they are best suited to weather rougher times ahead.

Canadian real estate investors and property owners can prepare by following trusted sources for updates on the confusing and rapidly evolving scenario, refinancing where possible and staying calm, well-informed and alert.

Your opinion matters

Click here to tell us what you think in our HPG COVID-19 Real Estate Survey.

Related reading

Why Canadians should think long term in real estate, especially now


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Caesarstone Dark Collection

Embrace the beauty of the new Dark Collection from Caesarstone

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Embrace the beauty of the new Dark Collection from Caesarstone

5810 Black Tempal
5810 Black Tempal

In the kitchen, a countertop is the place where meals are lovingly prepared, where gatherings gather, and where finished dishes are featured for consumption. Not only is durability a concern, but the visual impact of such a large area sets the tone of the room – it’s the backdrop to all that is served.

As part of its Dark Collection, Caesarstone introduces deep, bold colours, as well as tantalizing textures to its newest line.

A counterintuitive approach

For a look that will stand the test of time, complement and offset a myriad of appliance and cabinet finishes, Caesarstone’s Dark Collection adds a touch of drama and contrasting shades, while inspiring a sense of warmth and comfort. A homeowner’s choices of decor, art, furniture and colour help identify a room’s personality, and Caesarstone’s Dark Collection is just one more way to help them create a look all their own.

Form and function

Deep veined variances and fluctuating tonal shades of mined products upgrade the look of any well-designed room. Darker colours can also be more forgiving, and possess an imperishable quality that elevates natural attributes.

Caesarstone countertops are made from composite quartz, which is a non-porous product. Because this material is low maintenance to stains, its appearance will never be altered or require extra maintenance. This outstanding feature, combined with the bold tones of the Dark Collection, have given new meaning to enduring beauty.

Deeper shades of dark

The Dark Collection consists of four extra-deep shades, enhanced by Caesarstone’s new Natural Finish, which adds extra depth to the textural darks. The look and feel of this collection is set by the beautiful grain that runs throughout, adding a tactile warmth and a pleasing emotive response. A satin sheen emphasizes the natural veining and textures, while intensifying the depth of colour. These saturated features take this collection to next level of desirability.

5101 - Empira Black
5101 – Empira Black

The deep black base of 5101 Empira Black is augmented by fine white veins to emulate authentic characteristics of real marble, and is available in a matte or a gloss finish.

3101 Platto Black
3101 Platto Black

3101 Platto Black intensifies any statement look. A fine granular appearance enhances the textured finish.

4735 Oxidian
4735 Oxidian

The oxidized russet effect of the tarnished 4735 Oxidian finish warms a dark grey base, with a slightly textured grain.

5810 Black Tempal
5810 Black Tempal

A light veil of white streaks emulates a galaxy of stars on the charcoal base of 5810 Black Tempal. This complex composition is reminiscent of an industrial travertine.

Caesarstone products combine the look and feel of natural surfaces with advanced technology, which ultimately intensifies the hardness and durability, and guarantees surfaces that are non-porous, scratch-resistent and low maintenance.

caesarstone.ca


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Eternal Spring

Floral motifs in home decor predicted for spring in RENO & DECOR’s Trend Watch

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Floral motifs in home decor predicted for spring in RENO & DECOR’s Trend Watch

Just like we count on seeing the first tulips in our garden emerge as a sure sign of the arrival of spring, floral motifs seem to sprout every year around this time in fashion and decor as well. We covered the oversized, tropical-inspired blooms trend five years ago here on the trend page but there has been a shift in the type of floral print we are seeing. From large-scale, edgy-looking flowers to small, delicate ones that look like they took root in the ’80s – this is not your grandmother’s tribute to the dated floral theme though; mixed with modern and traditional pieces, the minute petals breathe new life into a space.

Maria Raco, founder of exclusive designer wallpaper showroom NewWall, talks about the current take on the sought-after springtime trend. “The oversized floral trend had its shining moment a few years ago but the current trend is definitely smaller, very real-looking and bursting with colour,” says Raco. She affirms the popular posies reflect our incessant need to bring the beauty of the outdoors into our interiors. “Flowers represent beauty and installing a floral wallpaper is the perfect way to achieving this in your home.”

Of course, seeing the delicate blossoms after a Canadian winter evoke feelings of hope and happiness as we anticipate imminent real-time outdoors enjoying nature’s beauty first-hand. The flowers may be smaller and echo another period in time but they keep us in an eternal spring frame of mind.

1 Anthropologie Home Floral Stoneware VASE, $68; thebay.com

2 Kate Space New York Protective Hard-shell Floral Galaxy S10 Plus CASE, $54.99; thebay.com

3 JÄTTELILJA DUVET COVER AND PILLOWCASES, white, floral-patterned, Full/Queen, $79.99; ikea.ca

4 Floral A-Line MAXI DRESS, $24.99; marshalls.com

5 KitchenAid 5-qt. Floral CERAMIC BOWL, $119.99; thebay.com

6 Vale Floral PLACEMAT, $16.95; crateandbarrel.ca

7 Villeroy & Boch Petite Fleur Floral Porcelain SALAD PLATE, $25.59; thebay.com

8 Rosetta Verdigris, $395 per roll; newwall.com

9 Majorelle Azure, $395 per roll; newwall.com

10 Large Floral 34″ SUITCASE from Herschel Supply Co, $259.99; thebay.com


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Ontario markets among Canada's least affordable: ReMax

Ontario markets among Canada’s least affordable – ReMax

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Ontario markets among Canada’s least affordable – ReMax

Despite a commonly held notion that housing in Canada is unaffordable, a majority of Canada’s largest cities (75 per cent) are currently undervalued, according to the 2020 ReMax Housing Affordability Report.

Unfortunately, seven centres in Ontario rank in the top 10 markets that are least affordable.

“Affordability was a cornerstone narrative during last year’s election, perpetuating the overall banner statement across Canada that real estate is increasingly unaffordable and unattainable, particularly for younger, first-time home buyers,” Christopher Alexander, executive vice-president and regional director, ReMax of Ontario-Atlantic Canada, told HOMES Publishing. “This perception is largely influenced (and skewed) by the Toronto and Vancouver markets, which represent some of the most expensive housing markets in North America. However, the housing market is more than these two cities and paint quite a different story. More markets are affordable than not, and most are accessible, with 75 per cent of brokers agreeing that their markets are undervalued.

In markets such as Toronto, demand is far outstripping supply, pushing prices up considerably as a result. “We need to continue to push for an increase in housing supply for buyers and renters, but we have yet to see a comprehensive national housing strategy to help facilitate this shift,” says Alexander.

“Given that approximately 110,000 new Canadians are settling in the GTA each year, the lack of available supply is a huge problem. This is concerning for affordability and needs to be addressed by a national housing strategy. Otherwise, we’ll only see the problem continue to grow and the home prices will continue to climb across the GTA.”

Of the regions surveyed, Winnipeg, Regina and Halifax are currently the most affordable markets, with average sales prices of $281,105, $301,473 and $319,071, respectively. Vancouver, Toronto and Mississauga are currently the least affordable regions in Canada, with average sales prices of $1.19 million, $883,520 and $760,005, respectively.

In Toronto, factors such as the OSFI mortgage stress test, listing shortages, rising prices and saving enough for a down payment are cited as preventing buyers from purchasing property. Buyers in this region are primarily looking to purchase condominiums, but as one of Canada’s least affordable housing markets, they continue to be priced out.

Emerging trends such as co-ownership with friends and family have become common in hot markets such as Vancouver and Toronto, in order to overcome the hurdle of high housing prices. In regions such as Brampton, Edmonton and Ottawa, sharing a single-family home between two families, dividing the floors between them or children seeking financial support from parents for down payments are becoming more common practices.

“All levels of government must work together to find a solution to Canada’s inventory issue, as the market will remain elusive for many otherwise,” says Elton Ash, regional executive vice-president, ReMax of Western Canada.


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