Whatever “new normal” is coming, the COVID-19 pandemic has reshaped many aspects of the real estate industry in Calgary and across Canada. From changes to the way homes are built, bought and sold, to shifts in buyer priorities and the economic forces at play, it’s been a wild ride for REALTORS®, builders, homebuyers and everyone in between.
One noticeable change to the purchase process has been an explosion in online shopping.
“The utilization of technology has seen a big shift in the real estate market,” said Justin Havre, Realtor with Justin Havre & Associates of RE/MAX First. “Our website traffic has increased by over 100 percent over the year.”
High quality virtual and 3D tours are now a marketing staple, allowing homebuyers to “visit” homes safely using their computer or mobile device. The current hot market has also made it challenging to get into some properties before they sell, but virtual tours lend buyers increased opportunity to make a deal.
“There’s less disruption to the homeowner and the buyer may not even be in the country,” said Havre. “Now, they can get an interior view and submit an offer without even stepping foot into the house.”
Meanwhile, Calgary homebuilders have been trying to adapt to keep up with high demand and shifting buyer preferences.
“We saw a pickup in traffic going out to areas like Cochrane, so people are scattering a little bit,” said Michael Klassen, Jayman Built’s Calgary sales manager. “But we’re still extremely busy in our communities around the city.”
“The utilization of technology has seen a big shift in the real estate market. Our website traffic has increased by over 100 percent over the year.” – Justin Havre, Justin Havre & Associates of RE/MAX First
This high demand for homes and a worldwide supply crunch have started to impact new-home prices over the last five months, especially in the detached segment.
“Container ships are sitting off the coast and can’t dock to get us product. Manufacturing facilities were shut down because of the pandemic and they’re trying to get up and running again while sitting on a backlog,” said Klassen.
“This is not a Calgary issue – it’s a global demand issue affecting raw materials required for building supplies and home products. It’s affecting the supply chain and therefore the cost side.”
When it comes to buyer preferences, the impact of work-from-home policies has been extensive.
“If everyone’s in the house all day every day, people need more space and different kinds of space,” said Klassen.
“Important items always on the list have become even more important today. The home office and gym, . . . dedicated spaces for kids to do schoolwork, and sometimes two offices with both parents working from home.”
The economic conditions surrounding the Calgary housing market have also been shaped by COVID-19 over the last 12-plus months. Uncertainty between March and June 2020 caused initial pullback in markets across Canada, but this was followed by a surprising bounce back.
“Most markets have seen a rebound in terms of sales activity,” said Ann-Marie Lurie, CREB® chief economist. “It was far better, and far sooner, than anyone expected.”
“The price growth we’ve seen should encourage more supply to come onto the market and shift us into more balanced conditions by the end of the year.” – Ann-Marie Lurie, CREB® chief economist
Driving this rebound was a low interest rate environment created when the Bank of Canada cut rates and lenders followed suit. “We’re looking at discount rates of 1.4 per cent,” said Lurie. “That’s very stimulative to the housing market and has drawn a lot of sales activity.”
Should the work-from-home trend continue, it will undoubtedly impact markets in the form of continued demand for homes outside city centres. However, Lurie cautioned buyers in the detached market to consider that increased rates are likely closer than they appear.
“The discount rate has moved up a bit from the lows we’ve seen,” she said, adding the Bank of Canada expects to increase rates in 2022, rather than 2023 as originally planned. “When that happens, it could start to cool off some demand in the market.”
Strong sales activity should continue as supply remains tight, but a correction is looming.
“The price growth we’ve seen should encourage more supply to come onto the market and shift us into more balanced conditions by the end of the year,” said Lurie.
Until then, Havre encouraged sellers in hot market segments to take advantage.
“This is critical: don’t sell your home to the first person who viewed it,” he said. “If you do, you’re potentially leaving tens of thousands of dollars on the table. Allow the market to get to your home.”