Affect of COVID-19 on Canadian real estate



The COVID-19 pandemic and a potential recession arriving at nearly the same time can feel scary, but if you're in the market for a home, you might be able to make it work for you. COVID-19 will impact the housing market and new houses for sale in
Kelowna, in a number of ways.
First, there are the practical issues of viewing, showing, and closing deals
while also practicing social distancing. Then there's the bigger picture: A
lack of confidence in the market, talk of a long-predicted recession, warnings
that unemployment is heading for record highs and a turbulent stock market.

The Canadian economy and real estate markets might not be able to escape the effects of the global coronavirus outbreak, but strong underlying fundamentals will return prosperity in the longer term.This is among the findings of a new study from the Real Estate Investment Network (REIN), a Canadian real estate education and research firm whose members have transacted more than 39,300 properties worth more than $5.1 billion. According to the REIN Special Report: The Coronavirus’ Impact on Canadian Real Estate, Canadian real estate will see an immediate cool-down, but a long-term lift, due to:

§ Temporary, small decrease in GDP growth

§ Increased immigration

§ Increased foreign capital

§ Increased demand

§ Leading to increased property values

These factors
represent a buying opportunity now, REIN says. Following is an edited
version of the report.

 Looking at the numbers, the future may not look especially bright, but there are also signs of hope. Take, for instance, the fact that China recently closed its last temporary coronavirus hospital because there aren’t enough new cases to support its operations. Apple has reopened all of its 42 stores across China and the number of new cases in South Korea is on a steady decline.

 Recession may be unavoidable

Earlier economic
forecasts originally saw the impact of coronavirus as “modest and temporary,”
at worst. But as more stringent containment measures are placed and oil price
shocks take hold, the impact may be greater and may last longer than initially
anticipated. Stalled exports to affected countries are set to negatively affect
the country’s quarterly growth. According to experts, the oil price
shock, coupled with supply disruptions, could tip the Canadian economy into
recession this year. Nevertheless, the same report suggests that the economy is bound for a sharp recovery once the virus is contained, stimulus kicks in and pent-up market demand boosts the economy upward once again.In current conditions, the economic implications of COVID-19 will be driven by a decline inland and international travel, along with the unprecedented oil price shock and disruptions to industry supply chains. The implications of policies, changes, and impacts are numerous.

Short-term impacts on real estate

This will depend on
quickly changing information and resulting policies as they unfold. Right now
townhomes for sale in Kelowna by Dilworth Homes are in freeze mode.

Medium-term impacts on
real estate. A decline in GDP growth may impair the rental and property markets in 18 to 24 months. However, this is a unique situation and the velocity of the changing situation and responses could compress outcomes and timeframes rapidly.

 Longer-term impacts on real estate

 Demand for Canadian
real estate will likely have a positive lift resulting from increased demand,
rental shortages, demographics, immigration policies, and Canada’s position as
a relatively safer harbor for capital, including foreign investment.



While there are travel
restrictions in place, existing immigration policies have not yet been altered.
The Canadian Federal government supports a continued upsurge in immigrant
populations in the next few years. Once the outbreak is contained and the dust
settles, we can postulate an increase in demand for migration to Canada,
particularly from China and other Asian countries. This could then increase
demand for both rentals and ownership properties, providing a further lift to
real estate markets.

Post-coronavirus Canada
can also mean a haven for foreign capital. All things being equal, it’s
possible that post-coronavirus foreign capital becomes increasingly directed to
international property investments, further boosting rental, new housing development projects, and property markets in the process.

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