Covid-19 impact on real estate.
We are going through some unprecedented times right now with this Coronavirus pandemic and
a lot of people are wondering what is going to be the impact of Covid-19 on real estate?
Well, as a realtor and mortgage broker in Calgary, Alberta, I'm going to give you guys
my top tips to consider if you're a buyer or a seller.
I also have a bonus tip at the end, so you want to make sure you stick around for that.
Let's get started.
Let's start with buyers first.
So as a buyer there might be some hesitation to buy property as this Coronavirus spreads.
One of the hesitations could be you know, the fear of getting infected.
The second is job security.
Now as municipalities put restrictions on travel, demand is going to drop for products
and services and this is only going to lead to budget cuts and layoffs.
Another hesitation might be in the form of a down payment.
Now I had a client who's down payment was supposed to come from the stock market, but
because it's been taking such a huge hit he wasn't able to pull that money out.
Instead, he had to get a gifted down payment from his parents.
So here's a bonus tip.
If that was your plan and you don't have sufficient funds for the down payment and you can't get
a gifted down payment from your immediate family members, then what you can do is either
get a co-signer or you could see if a grandparent is willing to do a reverse mortgage on their
property and gift you the equity.
Now, I'm not going to go into what a reverse mortgage is.
If you guys have any questions, feel free to comment down below and I'd be happy to
answer any of them.
A great thing though is that interest rates have gone down dramatically.
The cost of borrowing is much less now today than what it was even just two weeks ago.
The bank of Canada has dropped a rates, one full percentage point in the span of about
a week.
So you can take advantage of the cheap borrowing.
And another positive is that you could take advantage of potential fear and panic amongst
sellers here.
My tips for buyers, it is now more important than ever to get really crystal clear with
your why.
As an example, when I see clients, I don't ask them what they want, I ask them why they
want those things.
And in that conversation and strategy session, the important things then becomes quite clear
and obvious.
So it's important that we get really dialed in with your why so that we only see qualified
properties.
Now to mitigate the risk of coronavirus, my team and I are implementing of the following
things.
The first is pre-screening the sellers.
So asking them if they've been exposed to anyone who's tested positive for coronavirus
or if they're showing any symptoms like, you know, a fever or have a cough.
And for showings, I recommend not touching anything.
Also you could bring your own disposable booties, disposable gloves.
You could wear a mask and bring sanitizer with you so that you can sanitize your hands
as soon as you leave the home.
Now let's talk about sellers.
As a seller you might be hesitant to show your home, maybe because you have a sensitivity
to higher risk.
If you have kids or grandparents living with you and if you have a conditional deal know
that that could be at risk as well for the same reasons as I mentioned above with buyers,
job security, their down payment and things like that.
And if you did put together a deal and you're supposed to do any repairs or maintenance
on the home where you have to hire someone to come by, know that it might not get done.
Real estate could come to a grinding stop if there's any further restrictions to local
travel other than to places like the grocery store, the hospital, and the pharmacy.
So my advice for sellers is this, it's better to sell sooner than later because you're fighting
against three major elements.
The first element is obviously the coronavirus.
The micro impact of that is buyers job security.
They might not have their down payment and they might have a fear of visiting homes because
they might get infected.
The macro impact of that is the economic and financial consequences of businesses, facilities
shutting down and the city imposing travel restrictions.
The second element is oil and gas with a price war between the Russians and the Saudis.
And the fact that in Alberta, 25% of our GDP comes from oil and gas, it will no doubt have
an impact on our local economy.
And third is the potential of a recession.
It's a very real possibility and it could happen on a global scale.
Here are my tips for sellers - videos and 3d tours are more important now than ever.
Pictures aren't going to work because buyers are going to be even pickier with the houses
that they want to go see.
So you need a video that will be able to show the floor plan and as well as the flow of
the entire home.
It has to be as real of an experience as if they were right there in your living room.
We do recommend that you do disinfect your home and common surfaces after all your showings,
especially things like your kitchen counter light switches and a door handles.
Now another thing that you could do is also pre-screen the buyers and the buyers agent.
Ask them if they've been feeling sick or if they've been exposed.
And in terms of open houses, they're pretty much going to be eliminated in this environment.
It's likely that buyers and sellers will want to reduce their exposure if it's not necessary.
Before we go into our bonus tip, I hope that I've provided some valuable information for
you guys.
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Here is my bonus tip.
If you're a homeowner or you're a seller and you've decided to take your property off the
market because you're going to stay put for a few years or if you know someone else that
has a mortgage, take a look at the option of refinancing your property.
Now you can take advantage of super low rates right now because the bank of Canada last
week had dropped interest rates by 1% in about a span of a week, so the cost of borrowings
a lot cheaper now.
Now you will need 20% equity in order to refinance and you may most likely will incur a payout
penalty.
Make sure you call your lender and ask them what the payout penalty is and if it's the
interest rate differential or three months interest.
To wrap it up, I want to leave you with a few key points.
The first one is that real estate will still keep moving.
It's uncertain where this coronavirus pandemic is going to take us.
But one thing that we do know is that people will still need to buy homes and people will
still need to sell them.
The second is, even though buyers might be hesitant in this market, they're going to
be financially motivated because they want to take advantage of the low cost of borrowing.
And lastly, the slowdown from covid-19 should be temporary.
We will recover from this.
So hopefully this is helpful for you guys.
If you have any comments or want to engage in conversation, feel free to put it in the
comments below.
We'd love to hear your thoughts on where the real estate industry is going, given the impact
of the Coronavirus.
My name is Felix Chan with the liveinnercity real estate team helping you keep real estate
simple and we'll see you in the next video.