RE/MAX Canada
releases housing insights in key global markets amidst the COVID-19
crisis
- 56 per cent of Canadians who are planning to engage in the real
estate market say they expect to do so within less than a year
- Almost half (44 per cent) of Canadians believe that the real
estate market will bounce back to the strength it was before
COVID-19 by 2021
- 29 per cent of Canadians believe that before the end of 2020,
the real estate market in Canada
will return to its pre-pandemic strength
TORONTO and KELOWNA, BC, June 16,
2020 /CNW/ - Nothing is symmetrical about the effect of
COVID-19 on the housing market. In the same manner that
Canada learned containment lessons
from other countries where the virus hit earlier, we can also look
to these economies to assess the potential rebound in our own
economy and real estate market.
Looking at European markets that are similar to Canada in economic strength and regulatory
frameworks, such as parts of Scandinavia, Canadians' optimism in
the housing market seems well placed. The same can be said in the
U.S., where despite a national decline in sales of 20 per cent,
consumer fears are beginning to subside as restrictions start to
ease and activity picks up, particularly in secondary and tertiary
markets.
According to a Leger survey conducted on behalf of RE/MAX
Canada, 56 per cent of
Canadians who are planning to engage in the real estate market
expect to do so in less than a year, showing an eagerness to
get back to buying and selling.
"The market has definitely seen a steep decline in the volume of
transactions in the last few months, but in much of Canada, transactions have been happening and
prices in particular have been resilient. Now that economies are
beginning to re-open across the country and in light of some of the
recent activity we've seen in various cities across Canada, as well as in certain European and
U.S. markets, we anticipate that demand could begin to improve much
faster than we initially anticipated at the beginning of COVID-19,"
says Christopher Alexander,
Executive Vice President and Regional Director, RE/MAX of
Ontario-Atlantic Canada. "Regions such as Toronto, Ottawa, and Vancouver are excellent examples, and are
already experiencing an uptick in activity and the number of
multiple-offer scenarios, pointing to a post-lockdown housing
market outlook that is not nearly as dire as some suggested."
As restrictions begin to ease in Europe and the U.S., outcomes are dependent
upon locality and the economic conditions of a state, country, and
city prior to the crisis.
Europe
As lockdown restrictions begin to ease in countries such as
Austria, RE/MAX brokers and agents
in the region noted that recent demand was higher than before
COVID-19 took hold, even in comparison to the same period in 2019,
as indicated through an increase in website traffic (up 70 per cent
in May 2020 compared to May 2019) and requests from end consumers (up 63
per cent in May 2020, compared to
May 2019). RE/MAX Europe attributes this to accumulated demand
that fell dormant during quarantine, but has since returned in a
manner greater than has been experienced in other countries.
In Norway, which is comparable
to North America in terms of real
estate technology and transparency, insights from RE/MAX
Europe coupled with local real
estate board data indicate the market experienced its lowest level
of transactions during the week of March
16, when sales declined 36 per cent year-over-year. By
May 2020, sales were trending upward
again, reaching levels just 7.5 per cent below May 2019 activity.
Norway experienced an initial
10-per-cent drop in listings, which trended upward to 50 per cent
during the lockdown. However, by May
2020, listings returned to the market and were 18 per cent
below May 2019 levels.
RE/MAX Europe believes that
Norway is showing signs of
stability as restrictions continue to ease and consumer confidence
returns. It is estimated the market could bounce back to
sustainable levels by the end of 2020.
In Italy and Spain, which were among the hardest-hit
regions in Europe, real estate
markets are just now beginning to reopen. Current levels of
uncertainty combined with the quickly-changing environment
diminishes the reliability of any forecasting in the short
term.
The actual impact of COVID-19 on the housing market across all
of Europe differs from country to
country. Markets heavily dependent on industries hit especially
hard by the pandemic, such as tourism, may experience a slower
housing market recovery, according to RE/MAX Europe.
"It's still too early to tell when the housing market across
Europe will recover to
pre-COVID-19 levels, particularly given the asymmetry of countries
and cities concerning their economies, regulatory processes, and
pandemic containment efforts," says Kurt
Lukas, Executive Vice President, RE/MAX Europe. "What we do know is that COVID-19 has
shifted the practice and focus of our industry as a whole, whether
that's through the increased use of technology such as virtual
tours, e-signatures, or video conferencing by consumers and real
estate agents a potential shift in buyer trends, such as different
types of properties; or economic resilience. While there are
still many unknowns in the short-term, I'm confident that real
estate will continue to be a good long-term investment, as it
historically has been. There's no question of this."
United States
Leading indicators in the U.S. housing market, such as showing
activity from ShowingTime data, point to an optimistic rebound as
regions gradually open parts of the economy.
It's important to note that housing is unlikely to fall victim
to the current economic interruption in the same manner as it was
impacted during the 2008/2009 recession. Current lending practices
are more stringent, and on average, Americans have more home equity
now than they did in 2008. This is a key indicator that the country
could rebound more quickly, which is already being witnessed in
secondary and tertiary markets.
Country-wide, in-person showings and foot traffic to offices in
many cities has now returned to levels seen in January, despite a
market slowdown in March and April. A good example of this is
Connecticut, where according to
local office data, transactions in April were similar to levels
experienced earlier in the year and in 2019.
In New York, which has had some
of the highest case numbers of COVID-19 in the U.S., resulting in
strict stay-at-home orders, hope is on the horizon. As the
financial epicentre of the country, RE/MAX is seeing signs that the
typical buyer demographics in the region may soon shift from
professionals and young families who work in the city, to investors
and foreign buyers in search of promising investment opportunities.
This is expected to help the housing market bounce back.
RE/MAX also notes that this potential shift in buyer type may
help to jumpstart activity in suburban regions such as Connecticut, which has become a focus for
downtown New Yorkers who are now seeking access to more green
space, home office space, and more square footage that is not
available to them in the city.
"The housing market in the U.S. is very local. While nationally,
there has been a pause on real estate sales activity due to
COVID-19, there are multiple states and cities that are thriving as
the summer approaches, with RE/MAX brokers and agents across the
country reporting that multiple offers are on the rise," says
Fiona Petrie, Executive Vice
President and Managing Director, U.S. Operations at RE/MAX INTEGRA.
"We feel confident in the resilience of the U.S. market as a whole,
and as economies begin to open across the country, our clients are
expressing increased optimism as well."
Canada
RE/MAX of Ontario-Atlantic Canada and RE/MAX Western Canada
estimate that the housing market is likely to gradually begin its
return to sustainable, healthy levels toward the end of 2020.
As cities slowly begin the reopening process in the coming
weeks, there is likely to be a transition from the uncertainty
around the homebuying journey that was seen early on in the
COVID-19 pandemic, to an increased comfort level among consumers
and real estate agents when it comes to adopting new buying and
selling processes.
Canadian economies have been hit hard by this pandemic, and the
resulting job losses and cloud of uncertainty have left people
questioning the future value of their real estate investments.
However, many RE/MAX brokers across Canada have reported seeing relative stability
in April and May. According to data from the Canadian Real Estate
Association (CREA), April 2020
experienced a 56.8-per-cent decline in sales compared to
March 2020. This drop was
proportional to the decline in new listings hitting the market,
which were down 55.7 per cent month-over-month in April. But as
restrictions ease, market activity is already on the upswing.
CREA's May 2020 data reveals national
home sales were up 56.9 per cent from April, and the number of
newly listed properties up 69 per cent month-over-month.
Furthermore, the pre-existing pent-up demand for homes in hot
markets such as Vancouver,
Toronto and Ottawa may help mitigate the decline in buyers
who are suffering pandemic-related job losses.
Exceptionally low inventory in much of Canada may also contribute to upward price
pressure as restrictions ease and demand increases further.
In line with economists' predictions, such as CIBC Economics,
RE/MAX Canada estimates relative
price stability by the end of 2020, with a possible price
correction in the single digits. The exceptions include regions
such as Alberta and Newfoundland, which are still struggling to
rebound from a host of shocks, the dive in resource revenues, and
the potential for a second wave of COVID-19.
Canadians are equally optimistic, with almost half (44 per
cent) believing that the real estate market will bounce back to the
strength it was before COVID-19 by 2021.
"Canada's housing market was
strong before COVID-19 hit, and despite the tragic impacts of
the pandemic, we are optimistic that housing market could be
restored much sooner than initially expected," says Elton Ash, Regional Executive Vice President,
RE/MAX of Western Canada. "As we
saw in our 2020 Liveability Report, Canadian communities are
resilient and people love their neighbourhoods, showing a
collective commitment to bounce back."
Global shift to the practice of real estate
The pandemic has pushed the global industry to embrace a variety
of technology tools that were previously available but not always
adopted to facilitate a transaction. Now, professionals are
integrating 3D home tours and virtual open houses into their
listing and selling practices. Given that almost half of Canadians
(46 per cent) say that in a post-COVID-19 landscape, they'd prefer
to work with real estate agents who use technology and virtual
services in order to adhere to social distancing guidelines, agents
will need to adapt in order to secure and build their
businesses.
This sentiment is shared across both the U.S. and Europe, which have witnessed a shift in
consumer wants toward a more digitalized homebuying and selling
experience, such as e-signatures, virtual meetings, and digital
paperwork. It is important to note that in some instances, buyers
are still requesting in-person home tours before completing a
transaction.
Across the U.S., Canada, and
Europe, one common trend is
forecasted post-COVID-19: technology tools are no longer options,
they are a necessity to successfully facilitate transactions.
"A clear takeaway from all this is the importance of skilled,
experienced real estate agents," says Nick
Bailey, Chief Customer Officer, RE/MAX, LLC. "Buyers and
sellers can't depend on part-time agents to assist them in a
process that's even more complicated than normal. Especially now,
they need a full-time professional who understands the new
environment and has the resources to keep them safe while guiding
them to a successful closing."
Additional results from the Leger survey
- 60 per cent of Canadians prefer to use a professional, licenced
local real estate agent because they are credible and more
trustworthy than do-it-yourself listing services
- 22 per cent of Canadians are likely to buy or sell real estate
if the majority of the transaction is done virtually
About Leger
Leger is the largest Canadian-owned
full-service market research firm. An online survey of 1,571
Canadians was completed between May 1
– May 3, 2020, using Leger's online
panel. Leger's online panel has approximately 400,000 members
nationally and has a retention rate of 90 per cent. A probability
sample of the same size would yield a margin of error of +/- 2.5
per cent, 19 times out of 20.
About the RE/MAX Network
RE/MAX was founded in 1973
by Dave and Gail Liniger, with
an innovative, entrepreneurial culture affording its agents and
franchisees the flexibility to operate their businesses with great
independence. Over 130,000 agents provide RE/MAX a global reach of
more than 110 countries and territories. RE/MAX
is Canada's leading real estate organization with more
than 20,000 Sales Associates and over 900 independently owned and
operated offices nationwide. RE/MAX, LLC, one of the world's
leading franchisors of real estate brokerage services, is a
subsidiary of RE/MAX Holdings, Inc. (NYSE: RMAX). With a
passion for the communities in which its agents live and work,
RE/MAX is proud to have raised millions of dollars for Children's
Miracle Network® and other charities. For more information about
RE/MAX, to search home listings or find an agent in your community,
please visit www.remax.ca.
Forward-looking statements
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"forward-looking statements" within the meaning of the "safe
harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be
identified by the use of words such as "believe," "intend,"
"expect," "estimate," "plan," "outlook," "project" and other
similar words and expressions that predict or indicate future
events or trends that are not statements of historical matters.
These forward-looking statements include statements regarding
housing market conditions, including statements regarding the
recovery of housing markets and the timing of
recovery and the Company's results of operations,
performance and growth. Forward-looking statements should not be
read as guarantees of future performance or results.
Forward-looking statements are based on information available at
the time those statements are made and/or management's good faith
belief as of that time with respect to future events and are
subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in
or suggested by the forward-looking statements. Such risks and
uncertainties include the global outbreak of the coronavirus
(COVID-19), which poses significant and widespread risks. The
Company has already experienced significant disruption to its
business as a result of the COVID-19 pandemic. The magnitude and
duration of the negative impact to the Company's business from the
COVID-19 pandemic cannot be predicted with certainty, but the
Company believes COVID-19 is likely to result in an adverse impact
on its business, liquidity, results of operations and financial
condition. Other important risks include, without limitation, (1)
changes in business and economic activity in general, (2) changes
in the real estate market, including changes due to interest rates
and availability of financing, (3) the Company's ability to attract
and retain quality franchisees, (4) the Company's franchisees'
ability to recruit and retain real estate agents and mortgage loan
originators, (5) changes in laws and regulations that may affect
the Company's business or the real estate market, (6) failure to
maintain, protect and enhance the RE/MAX and Motto Mortgage brands,
(7) fluctuations in foreign currency exchange rates, (8) the
Company's ability to obtain any required additional financing in
the future on acceptable terms or at all, as well as those risks
and uncertainties described in the sections entitled "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the most recent Annual Report on Form
10-K filed with the Securities and Exchange Commission ("SEC") and
similar disclosures in subsequent SEC filings. Readers are
cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date on which they are made.
Except as required by law, the Company does not intend, and
undertakes no duty, to update this information to reflect future
events or circumstances.
SOURCE RE/MAX Canada