In late May—just weeks after Canada’s national lockdown had lifted—home sales in the country had rebounded by 57 percent, according to The Canadian Real Estate Association. Similarly, Reuters recently reported that many real estate agents in Ontario and Quebec are seeing multiple offers on single family homes. It’s a trend in the Canadian real estate market that insiders have witnessed firsthand, and which they believe is showing few signs of abating.
Those insiders include Louise Rémillard, president and founder of Profusion Realty Inc.; Natalka Falcomer, executive vice president of corporate development at Chestnut Park Real Estate Limited, Brokerage; and Reba Wilson, broker and director of marketing and strategic development at Marilyn Wilson Dream Properties Inc. Brokerage. Here, they share insight into the trends in their respective markets, how their brokerages have adapted in the wake of COVID-19, and their outlook for the rest of 2020 and beyond.
The Canadian real estate market saw little to no activity during the country’s lockdown from March to late May 2020. While this led to contraction in some segments of the market—notably sales of condominiums—all three brokerages have still seen this year’s performance outstrip that of 2019.
“We’ve seen an unprecedented increase in prices and sales volume, not only in core markets, but also in cottage country,” says Falcomer of Chestnut Park Real Estate, which has offices across Ontario. “Despite the pandemic, buyers have continued to compete, especially for low-rise and detached homes.”
Results for Profusion Realty are also optimistic, exceeding last year’s figures by quite a margin. “For the Montreal area, sales are up 37 percent, with a 21 percent increase in prices, compared with October 2019,” explains Rémillard. “Properties are also moving much faster, however inventory is down some 15 percent and as a result we’re experiencing multiple bidding wars.”
Marilyn Wilson Dream Properties reports similarly positive results. “Our performance this year has outdone that of last year, as luxury properties in Ottawa are selling with fewer days on market and many are going in multiple offers,” Wilson says. “To date, we have 86 percent of the market share for properties sold for C$3m ($2.23m) and above in our marketplace, and we have 27 percent of the market share for properties sold over C$2m ($1.49m).”
Increased Demand for Luxury Real Estate
“There are several new trends in the luxury market that have been brought about by the impact of COVID-19,” says Wilson. “Firstly, we’re seeing more buyers purchasing luxury homes. So far this year, there have been 32 sales over C$2m ($1.49m) in Ottawa. During the same period last year, 16 homes sold in the same price category. We attribute this to people investing more at home and traveling less, as well as people wanting to invest in larger properties where they can work from home more comfortably.”
Rémillard agrees: “People seem to have more money available to spend within our borders, as they haven’t had the costs of trips and entertainment that they might have had in a usual year. As a result, homebuyers are prioritizing their quality of life and are prepared to pay a premium right now. Homes that were selling for C$1.1–1.2m ($820,193–894,696) last year, are now selling for C$1.8–1.9m ($1.33–1.41m). Because there’s so little available in the market, if a home’s view is good, if it’s on a lakefront, or if it’s of a decent size and can be improved upon, they just go for it.”
“In fact,” Rémillard continues, “the demand is so high, that we’re receiving three to five offers on almost every listing. We’ve even seen 20 to 25 offers on a single house, with one exceptional property receiving as many as 70 competing bids. We’re in a crazy, crazy market right now.”
However, Falcomer cautions that this demand has not been across the board. “Condominium apartment listings have experienced a slower pace of price growth,” she says. “While we have yet to see negative growth in this segment, the condo market isn’t experiencing the incredible 20 percent increase in sale prices witnessed by the detached market.”
“The demand for downtown condos is diminishing,” Rémillard concurs. “Those with large terraces or some outdoor space might not be as affected, but a lot of people are moving away from condos and are going towards suburbia. In Montreal that’s either the North Shore or the South Shore: buyers want to have somewhere with outside space, which offers a different type of lifestyle.”
New Ways of Living
Canadian buyers’ desire for space and security is a trend that all three real estate professionals have noticed—unsurprisingly, it’s arrived hand in hand with the increase in remote working. “Many of our clients realized that 500 square feet (46.5 sq m) just isn’t enough to juggle two Zoom call schedules,” Falcomer explains.
As a result, the demand for remote properties is also on the rise. “With the commute being less of a factor, many of our buyers are choosing to invest in rural properties that offer acreage, views, and privacy,” Wilson says. “We’ve seen the demand for country homes increase by almost 60 percent,” adds Rémillard. “Buyers are really looking to flee the city and find a safe haven in nature.”
But that high demand comes along with particular specifications: “An increasing number of buyers are adding private studies—where they can work more efficiently away from the busy family rooms in their homes—to their list of home criteria,” Wilson explains. “A lot of people are also homeschooling right now,” Rémillard says, “so they’re looking for homes that offer a space just for that.”
Canada’s stringent lockdown rules made holding viewings during lockdown impossible and, as socially distanced home tours have become the norm, all three brokerages have embraced the innovations offered by technology.
“We’ve invested more in 3D tours and footage that shows our properties in more detail, so that we’re facilitating fewer—but higher quality—showings,” says Wilson. “We also take some clients on digital tours via FaceTime and other technologies. These real-time tours allow us to show a home to serious international buyers, or those who’d like to be more socially distant.”
Similarly, Profusion Realty has put video call technology to good use. “We sold quite a few homes via FaceTime, where the buyers didn’t visit the house in person until the sale was complete,” Rémillard says. “People are very motivated to buy homes, and of course 3D home tours and virtual viewings have helped a lot.
“As with all agents, replacing in-person showings was critical to facilitating the sale of a property, and at Chestnut Park virtual ‘open houses’ replaced the usual in-person walkthrough experience,” Falcomer says. She adds that they took the marketing of properties one step further, too—“we found that social media was a wonderful tool to create stories about the property and bring a listing to life.”
When it comes to smart investments in the region, Falcomer believes that the downturn in the market for condos could present an opportunity in the long term. “The condo market in the downtown core of Toronto is softening due to short-term trends but, as the city is revived and our borders are reopened to immigration, urban living will once again become appealing and in demand. In three to four years from now, we foresee a possible shortage in supply for condos and prices will rebound. Purchasing such a property now will likely yield a greater return down the line.”
Rémillard’s thinking follows similar lines. “Prices in Montréal’s condo market are almost certainly going to be driven down in the short term,” she says. “But those investors who can play the long game, and handle a lack of demand during the pandemic, will eventually see good returns on their money.”
“City homes with good bones that can be rented out are always a good bet,” agrees Wilson. “To this end, neighborhoods in Ottawa such as Rockcliffe Park, the Glebe, and Manotick all offer great investment opportunities at this time.” She adds that the lifestyle factors a property can offer should also be considered. “Canadian waterfront properties are a great investment for buyers in our market, as are resort-like properties close to Ottawa, which offer the convenience of proximity to the city along with incredible lifestyle amenities.”
The Rest of 2020, and Beyond
So, what’s the outlook on real estate for the remainder of this year, and into 2021? “In Montreal, and in Quebec in general, I don’t see the market slowing down at all for the rest of this year or the start of next,” says Rémillard. “We’re currently nearing the top of the wave, so I believe prices may stabilize a bit—but I don’t foresee a diminishment in price.”
Wilson’s outlook is cautious but, like Rémillard, she believes there will be more stability in the year ahead. “We’re already experiencing a shortage of inventory, and we feel this will continue and could even worsen. However, our market has been underpriced for a long time, so a shortage in supply is leading to a more balanced market overall.”
“To be sure, we’re not skipping into sunset without a care,” Falcomer cautions. “The economic outlook is uncertain, and Canadian banks are more cautious about their lending practices than they were before the pandemic. So, given these complexities and the plethora of economic, social, and political challenges we’ve been experiencing, any short-term predictions are unreliable. But what is reliable is fact that Canadians are resilient and, in the long run, so too will be our real estate market.”