The process of buying and selling a home has changed in just five short months.
The COVID-19 crisis has altered everything from buying and selling decisions to open houses to home price expectations.
Before social distancing measures became a part of daily life, 37% of Ontario homeowners reported that they were going to list their home for sale this spring. So says a poll by the Ontario Real Estate Association (OREA).
But today, just 7% say they currently have their home listed. That contributed to a record 57% decline in April home sales versus a year earlier.
Sales in many cities bounced back in May, however. In the Greater Toronto Area, they jumped 55% compared to April. These buyers are witnessing a very different homebuying process.
Social distancing restrictions have led real estate agents to adopt new technology and have been encouraged to conduct their showings virtually when possible. This can include videographers using cameras to scan and take videos of a home so prospective buyers can view the home in 3D and even tour it using virtual reality headsets.
Perhaps surprisingly, 42% of Ontarians said they were “open” or “somewhat open” to purchasing a home that they could only view virtually using online tools. A third (33%) said they were not amenable to that idea.
A similar poll in the U.S. found that six in 10 (61%) homebuyers have toured a house virtually over the last two months.
In many of these cases, however, any purchase agreement would most likely be conditional.
“A lot of people will say it is conditional on them doing a full inspection when they are able to do that,” Colleen Koehler, president of Kitchener-Waterloo Association of Realtors, told CTV News.
Changes in Homebuying/Selling Plans
Of those who intend to sell but don’t have their home listed yet, 11% say they plan to list their home in the next few months, whether the pandemic continues or not.
Close to a third (28%) said they will list their home as soon as the pandemic is over, and 61% aren’t sure.
Changes in Homebuying Preferences
Spending months cooped up in our homes has also affected what some homebuyers say they now desire in a future home.
Asked if being in isolation for the past few months has changed what they want in a new home (compared to pre-COVID-19):
- 28% said they now want a bigger home/more space/more amenities
- 25% want more outdoor space
- 8% want a smaller home
- and 5% say they now want a more practical and convenient home layout
Despite many experts forecasting an increase in homeowners drawing upon their Home Equity Lines of Credit (HELOC) to get them through the crisis, OREA reports that 90% of Ontarians who are active in the real estate market have not refinanced their mortgage or used their HELOC to cope with financial hardship related to COVID-19.
Mind you, you can’t refinance if you’re out of a job or have an active mortgage deferral, so these numbers may not tell the whole story.
Where Canadians Expect Home Prices to Go
One of the biggest questions since the lockdown began has been where home prices go from here.
Economists have forecasted anywhere from a 5-10% drop, to the Canada Mortgage and Housing Corporation’s more dire forecast of an 18% drop.
Homeowners, however, are tempered in their forecasts. Once the pandemic is over, Ontario homeowners expect prices will:
- Increase a lot (7%)
- Increase somewhat: (27%)
- Stay the same: (19%)
- Decrease somewhat: (34%)
- Decrease a lot: (6%)
Less than one in 16 homeowners expect a crash despite this recession being the most severe on record. That says a lot. Millions of Canadians clearly believe that demand will ultimately continue outstripping supply.