What's Happening With Home and Rent Prices During COVID?
The pandemic is driving house prices down – or is it? We explore post-pandemic real estate in Ontario.
COVID-19 has changed a lot about the way people are living their lives, and with it, where they’re living. As if enduring a global pandemic wasn’t enough, now the opportunity to mix up real estate is compounding our collective stress.
Here, we set out to understand what’s happening and what to do about the COVID-19 real estate market.
Housing circumstances have changed
Depending on how you’ve weathered the pandemic storm, there may be some substantial changes in your life. Perhaps you are still working from home, and may continue to do so post-pandemic as a result of evolving office policies. Alternatively, you may have left your role or changed jobs, leaving you with an entirely new commute option. Maybe market changes and low mortgage rates have you pining to trade-in a congested high-rise for the open space of a freehold home.
No matter the situation, COVID-19 has changed perspectives all over: rent drops have seen some relocating to penthouses, cancelled weddings present new opportunities to invest, and others are fleeing the city for more space.
Jumping into the market
It may be tempting to double down on your house hunting and make lemonade out of pandemic-lemons, but Chris Cook, real estate agent and founder of the Halyard Group cautions against rash decisions in this market: “Unless you have to, or there is an amazing opportunity, be sure you know what you’re trading.”
For individuals in the rental market, it may be tempting to take advantage of falling residential rent prices – but Cook reminds us that the price difference may not be that great, especially when you factor in the costs associated with relocation. Things to think about include the cost of moving, furniture purchases, and setting up utilities.
There’s also the element of staying in place – it’s best to avoid movers packing up (and touching) everything you own. A better strategy? Cook recommends discussing your lease terms with your landlord, and potentially negotiating a reduced monthly payment. Landlords may be interested, particularly if you are an easy tenant.
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For homeowners, Cook recommends that you “take a look at the market you’re considering – different markets are behaving very differently. Freehold homes in Toronto are largely business as usual,” while in areas like Newmarket prices and competition are “on fire,” due to city folks decamping to smaller cities and towns.
One area of opportunity, he notes, are city condominiums. These markets have seen a surge of inventory, and a related drop in prices – a good investment, as the market is expected to eventually rebound. Look at areas that were popular for AirBnB, or housing hubs near universities. Travel restrictions and education changes have seen many condos hit the market, as owners ditch their stale investment properties – which may translate into a great opportunity for you.
Think outside the (moving) box
If you have the means to invest in real estate, Cook recommends looking at your options with an agent. While buying something in your neighbourhood may not include a COVID-19 discount, there may be other investment opportunities available, like a rental property or cottage. He reminds readers these types of investments can increase your wealth in an attainable way, even if your principal residence stays the same.
The COVID-19 pandemic continues to underscore the importance of resiliency – things may change often, and rapidly. When making a big decision in a time like this, it’s important to evaluate your ability to meet all requirements (financial and otherwise) of homeownership, even while riding the residual global pandemic waves. The goal should always be “home sweet home,” rather than “home stressful home.”