For the time being, some real estate agents are still listing and showing homes – just with more precautions in place.
But the (traditional) open house looks like it may be over for the time being, says Cheri McCann, broker of record at McCann Realty Group Ltd. in Toronto. Instead, both agents and buyers are making more private appointments.
“I’m still seeing a lot of activity. There was just a house on Avenue Road with offers,” says McCann, adding she still has listings coming out. “The last couple of days everything has been selling at (asking price) or over” and there are still multiple offers.
This mirrors the expectation of Robert Hogue, senior economist at the Royal Bank of Canada, about the housing market under the widespread effects of the COVID-19 crisis.
He stresses it is a rapidly evolving situation, with unknown outcomes, making prediction difficult.
But RBC believes that since Canada’s housing market entered the year on a strong footing, it will take a bit of time for the likely downturn to affect the sector.
“Given how tight the market is, it provides a little bit of a buffer before prices start to decline,” he says.
However, he also believes both buyers and sellers may move to the sidelines for a while, so supply and demand may move in tandem, and he does not see prices spiralling down.
David Doyle, North American economist and market strategist at Macquarie Group Ltd., agrees that the real estate activity seen now is a continuation of existing buyers and sellers who have committed to their decision. Beyond that, he sees people holding back.
With low interest rates, people may keep buying, with some people even talking about looking at an investment property, says Mark Arnstein, sales representative with RE/MAX Hallmark Realty Ltd. in Toronto. As well, he notes, people who bought a property before the crisis hit still need to sell their homes.
Low “interest rates might initially keep demand going,” says Hogue, but RBC expects a recession. If the economic hit is reasonably limited, “By late this year, with interest rates incredibly low, people may rush back into the market.”
However, “If the economic hit is more prolonged, people will probably postpone [buying] to 2021.”
Macquarie's Doyle sees a slow recovery. “We will probably come out of this with a grinding path rather than a sharp return to normal.” He believes there will be more weakness in prices returning the farther you get from Toronto's downtown.
In the meantime, some sellers are putting into place such arrangements as allowing buyers to put in an offer before the one-week waiting period, says McCann, making it a shorter process so there are not as many people going through the home.
While supplies last, sanitizer is required by visitors, and some use masks and gloves. People are spraying down the property after a showing. And she recommends older property owners not be present during a showing.
McCann has stopped passing around a pen to sign documents, instead passing out plastic-covered pens so all parties use their own pen, then keep it.
She notes some people are asking the listing agent to show the property. And some buyers are asking for feature sheets to be emailed, so they are not touching printouts.
Sellers have been using virtual tours for years, says Arnstein, but especially now it is recommended.
He notes that during the 2008 financial crisis, rates dropped dramatically and there was a feeding frenzy in the housing market.
But it is hard to look at previous situations to guide decisions now, Hogue says. For instance, looking at the SARS outbreak, it was not as widespread as COVID-19. And the 2008 financial crisis was based on credit freezing up, not a global health-related downturn, so central banks were able to use some tools to stimulate the economy.
In this case, says Doyle, “The Bank of Canada ... can't come up with a vaccine.”
Hogue notes, “There might be similarities in psychology. The reflex of people is to hunker down and wait it out.”
However, “the moment we get a sense the COVID-19 situation is stabilizing, we may see a big rush back into the market,” making prices go up at that point, Hogue says.
Only time will tell how this will all play out. But given that RE/MAX has just come out to "strongly" advise its agents against hosting open houses, the way people buy homes may be changed for a very long while.