Buying and Selling in the COVID Era
Thursday May 21st, 2020
Every industry has adapted to the unprecedented times that we are facing, and Real Estate is no different. While the volume of transactions has fallen dramatically in the past two months, the balance between new listings and sales has remained level. As a result, the April average price in the GTA did not see a drop, year-over-year. And, while we are not seeing the super-hot conditions of February, this more balanced market can be a welcome change for both buyers and sellers.
The Serious Buyer
Not surprisingly, this market has eliminated the “tire-kickers” and browsers of normal days. Buyers that are currently in the market, tend to be serious and ready to purchase. For sellers, this means less window-shopping and reduced traffic in your home. Those who book showings, have done their research and have a greater likelihood of submitting an offer.
From a buyers perspective, reduced traffic can translate to less competition and more negotiating power on desirable properties. We have entered a more balanced market.
Financing and Interest Rates
Buyers need to secure their financing in advance, particularly if there has been any changes in income during this crisis. While lenders are quite happy to offer mortgages, they do want to see that employment is secure and adequate. They will also likely ask for recent pay stubs close to your closing date.
Interest rates are remarkably low right now, leading to greater affordability and low monthly payments. It’s a great time to lock in a super-low 5 year fixed rate!
Buyers and sellers should consider negotiating a short closing date. At present, we haven’t seen any dramatic drops in price, however, with the uncertainty of the economy and possible virus resurgence, the future holds some questions. Should home prices start to fall more significantly, a long closing may put your appraisal at risk.
The Virtual Experience
As an industry, we have been encouraged to embrace technology throughout the selling experience. Preliminary discussions and consultations are being done by video conferencing, documents are being signed by electronic signing software and most significantly, virtual tours have largely replaced weekends packed with showing after showing. Open houses have been placed on hold.
The quality of virtual tours that some companies are offering is incredible. We are literally able to invite our clients to log into a tour, and from the comfort of their own homes, experience a realistic walk through of the property. We can discuss the property together while zooming into every corner and understanding the layout. We then narrow down the options to only the most suitable properties, and schedule in-person viewings. For buyers, this speaks to the importance of understanding your priorities and doing your research on neighbourhoods, schools, etc.
From a seller perspective, a great virtual tour could mean the difference between your highest paying buyer coming to see your property or passing it over!
The majority of listings can be be booked for in-person showings with some adaptations to keep the buyers and sellers safe. Buyers are required to answer a screening questionnaire, prior to booking. We also try to control the number of people in the home; no double bookings of appointments, no children, etc. We use mask and gloves and are careful not to touch anything inside. Sellers are expected to keep the home clean and wipe down surfaces with a disinfectant.
There are some properties that have opted to restrict in-person showings until after a conditional offer has been accepted. I have seen this infrequently in owner-occupied homes, but more commonly in tenanted properties.
Should you Jump In?
Buying and selling in them same market offers an inherent level of “protection”. For sellers, the reduction in number of listings translates to less competition in the market. But, you may need more patience, as your home may take a little longer to sell. For buyers, the reduction in activity can mean less competition on homes and more negotiating power. This coupled with the amazing interest rates, translate into greater affordability.
And for those purchasing their first home, this market is is an opportunity not to be missed.
As any economist will tell you, we are living through unprecedented times and no one can predict how the housing market will fare in the short and medium term. Every market has advantages and disadvantages to buying and selling, including this one. While the COVID-19 environment has put us all into very unfamiliar territory, the GTA has proven itself to be a strong and resilient market.
Taking the plunge now, could be the best decision you make. If you’re thinking about it, or have questions, I’d love to chat!