Covid-19 vs. The Spring Real Estate Market in Southern Georgian Bay

Hello Loyal Readers & Real Estate Enthusiasts!

This message comes from the comfort of my home office- as I attempt to digest the latest developments and possible economic impact caused by the Covid-19 Virus, on the Real Estate Market in Southern Georgian Bay. All of this while dodging the toys my two year old son is throwing around behind me… I expect I’m not alone.

If ever there was a blog to read, this is the one.

As we all continue to do our part to combat the COVID-19 Virus, you may have heard that Real Estate Agencies have been deemed an ‘essential service’ by the Government of Ontario.

While we are open for business, Nick and I are both treating this with the respect that it requires, and are working- but from behind the desk only. And it certainly is not business as usual.

We have had some questions over the past few days with respect to market conditions, and what to do for those that were in the process of buying, or considering selling, before the virus made its introduction to our area. And furthermore, how to proceed if you do fall into one of these two categories now.

A Note for Sellers & Buyers:

We’ve seen some ads lately leveraging the low inventory of homes for sale, alluding to a good to time list your property. While this is true, the question becomes, is it a good time to buy or sell for you?

In the past few days, we’ve witnessed a considerable drop in the number of properties being listed in Southern Georgian Bay. And a jump in listing cancellations. We’ve heard that recent mortgage rate cuts have brought out new buyers, and an increase in buying power (buyers budget) opens new opportunities. A combination of these enables the Real Estate ball to continue rolling.

Logistics aside, a selling party could see opportunity given the lack of housing availability. And a buying party could see value in purchasing in this market.

And there are ‘work arounds’ including virtual tours & 3D floor plan renderings, and ways to work & negotiate remotely, without the buyer ever actually seeing the property in person.

Many buyers & sellers are willing to work under these new constraints. As Realtors, we will continue to accommodate your needs

Covid-19 vs. The Spring Real Estate Market in Southern Georgian Bay

What about the Future?

For those wondering what impact the virus will have economically in the months (or years) to come on the local housing market, we can’t be sure. What we can say, is that:

It is impossible to predict the future of the real estate market with any degree of certainty. We can certainly look for influencing factors on the current market and forecast outcomes, but external influences are vast and variable. What we can do is pass along the information we have to assist you in making an educated decision as to how to proceed as a buyer or seller.

In its simplest form, supply and demand drives real estate prices. If supply is constrained and demand is high, real estate prices are driven upwards, and vice versa.

In typical markets, factors affecting supply can be influenced by things like new home construction and willingness to sell. While demand is driven by factors such as interest rates, mortgage availability, economic stability, population and so on. The market we are about to enter is going to be subject to abnormal circumstances that lack familiarity.

What we know:

1. People are reluctant to view properties
2. People are reluctant to have others view their properties
3. Immediate, but not necessarily long term financial hardships
4. Low interest rates
5. Foreseeable pent up demand

These items are influences on the current market. Since we have only seen a decrease in activity in the last few days; these influences have not yet achieved an outcome. If the government stimulus plan floats incomes, and the pandemic slows sooner recent forecasts show, this could lead to pent up demand, coupled with historically low interest rates. This in turn could create an accelerated market (housing prices rise faster than inflation) leading to bidding wars and properties being sold over market value.

Alternatively, an extended strain on the economy and a stimulus plan that can’t keep up with loss of income could lead to recession. Consequently, demand will fall with the removal of the most important market influence of all… money.

Unfortunately we cannot advise on how the future of the real estate market will look. Anyone who does advise, is speculating and does not know for certain.

The Spring Real Estate Market in Southern Georgian Bay

The Bottom Line:

If you are making a lateral move from one home to another, a loss on the sale side will be recoverable on the buying side. Because the market is relative, if there is a rise or dip in average sale price, one may sell low and buy low, or conversely, sell high and buy high.

If you are buying or selling your primary residence, do what feels right.

If you are upgrading because your family is growing, then move to be comfortable.

If you are downsizing for retirement, selling now will still provide you with a retirement fund.

If you are moving towns or cities to explore new opportunities, these opportunities haven’t changed.

If you are an investor, proceed with caution. Do your homework and consider the influences that may change the direction of the market. Anticipate a change in Cash Flow Projections in the short term.

Trying to time the market is a gamble that may not pay off.

We hope that this message assists in an educated judgement moving forward, in these unpredictable times.

Lastly, for all of us that are concerned about the Virus as a whole- be diligent & stay safe. Remember, this to will pass.

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