In light of the COVID-19 pandemic, the real estate market, typically robust during the spring and summer, is facing unusual challenges. Real estate, in particular, is an industry that relies on personal contact for all aspects of its operation. Agents meet with clients regularly to negotiate deals, tour properties and sign paperwork. Given the social distancing and self-isolation protocols put into place this month across the country, agents, buyers and sellers have no doubt been wondering what the impact on real estate purchases and sales would be.
2020 Originally Predicted to be a Record Year for Real Estate in Canada
In February of this year, just a few weeks before the COVID-19 disease was declared a pandemic by the World Health Organization, Canada saw a record increase in year-over-year real estate transactions. A healthy economic situation combined with a shortage of available housing meant there was a strong sellers’ market, particularly in major cities such as Toronto, Montreal and Vancouver. As a result, the spring and summer were expected to be particularly strong in terms of real estate transactions across the country. However, in just a few weeks the situation has changed dramatically. People are much less secure at work, undoubtedly leading many who may have considered a new purchase to wait and see instead. Further, the practical implications of slowing the spread of the virus have resulted in changes to how all businesses operate, including the real estate industry.
OREA Releases Statement Urging Agents to Avoid Personal Meetings
When the provincial government announced earlier this week that all non-essential businesses were ordered to close unless they could remain operational on a remote basis, real estate services were added to the list of essential services. This was done to allow transactions to continue as planned and to minimize the impact of a significant hit to the real estate market on the economy, which is already facing dramatic challenges. However, the Ontario Real Estate Association (OREA) is making it clear that this does not mean “business as usual” as far as transactions go.
In particular, the organization, which regulates and oversees approximately 79,000 realtors throughout Ontario, is advising all agents to cease face-to-face meetings for the time being. This means no open houses, in-office meetings, or personal showings of properties. In particular, OREA is advising that agents avoid showing any tenant-occupied property, as these showings expose the agent, potential buyers, and the tenant to potential infection.
The president of OREA, Sean Morrison, was quoted in the statement as saying, “As Realtors and community leaders, we must do our part to help limit the spread of COVID-19. Why put your health on the line – or the health of your client or community – for showings that can simply be postponed for a few weeks? It’s not worth the risk.”
Rather than in-person meetings and showings, OREA is recommending the use of technology to facilitate remote transactions, such as virtual property tours. When it comes to tenant-occupied properties, the tenants often have no say in when a property is sold. As a result, it is a particularly unfair burden to force unnecessary personal contact on them and to ask that they open up their personal living space to strangers who may pose a health risk.
The Takeaway for Buyers & Sellers
Given the unexpected limitations on person-to-person contact and the need to practice social distancing to slow the spread of the virus across the country, not to mention dramatic shifts in the Canadian economy, those looking to buy or sell property may be encouraged to be patient for the time being. Of course, there is nothing stopping a transaction from taking place, but it may happen in a non-traditional manner out of necessity. For buyers uncomfortable purchasing a property without first seeing it in person, this will undoubtedly pose challenges. Further, the lack of access will complicate other matters, such as home inspections or even property valuations for listings or mortgage approvals. Buyers and sellers should prepare for a much cooler spring than originally anticipated, and hope for an improved situation across the board come summer.
The real estate lawyers at GLG LLP in Toronto assist clients with a full range of residential real estate services, including purchases and sales, financing and even litigation if necessary. The firm offers exceptional client service as well as a Bay St. experience with more reasonable rates. Call 416-272-7557 or complete the online form to arrange a consultation.