By | Sierra Powell
It’s not a surprise that COVID-19 was a game-changer across the business world. A majority of Canadian companies have lost one-fifth of their revenue as the virus has gone through stages of escalation and waning. It has put many businesses in dire positions.
Except for real estate. Those with the right amount of savings and low debt have been able to purchase homes and commercial properties during this crisis. As a result, prices for these locations have either remained the same or increased. With record-low interest rates, this might not change any time soon.
So, the question comes down to this: What’s the future for real estate after COVID-19. Here are a few predictions.
Home Prices Will Go Down
It might not happen immediately, but real estate experts say that prices for new and existing homes are going to decrease in 2021. The amount is somewhere around seven percent. While it’s not much, it is a change from current trends over the last few years.
What does this mean? The average price for a home is around $380,000. A seven percent reduction puts the property in the range of $350,000. The amount saved could be used as a down payment for the home.
New Home Glut
One of the reasons for the price reduction is a home glut, particularly in the areas around Calgary and Edmonton. That’s due to a decrease in productivity in the Alberta oil fields. As a result, not as many energy workers are staying in the province.
This means new homes for sale in southeast Edmonton and Calgary might cost considerably less in 2021. Especially rapid possession properties. Building companies like Sterling Homes already have several of these available with a turnaround between 30 and 90 days. Though the floorplans are already laid out and the designs can’t be chosen, rapid possession properties are a way for home builders to recoup losses.
The number of positive COVID-19 cases in the major cities and their surrounding suburbs caused residents of those areas to panic. Even as things settled down, they were still wary about going out. As the end of 2020 approached, a new wave of cases cemented their decision to leave for less-infectious pastures.
Hence, 2021 may see a flight of city and suburb residents from their current locations. City-dwellers will move to the suburbs for some relief. Meanwhile, those in bedroom communities will head toward rural areas far outside the borders of more heavily populated spaces.
More Affordable Housing
Families in lower-income brackets were hit hard by the 2020 pandemic. Their work hours were reduced or their companies temporarily closed. Sometimes, short-term furloughs became permanent. In turn, they were unable to pay their rent and came close to being homeless.
Fortunately, the Canadian government stepped in. In September of 2020, they released over one billion dollars of COVID funds to help build 3000 affordable housing units for low-income families. This provides a boost to those that have already applied for this form of residency.
Commercial Office Space
Opinions are divided on the state of commercial real estate come 2021. With a majority of businesses going to a work from home status for the foreseeable future, there are numerous properties abandoned. Some will end up for sale due to a few factors.
The primary one is several of these companies weren’t able to survive during the pandemic. Even going digital was too little for them to make up the revenue. Thus, they closed down.
The secondary factor is those who successfully moved to a digital platform have decided to stay that way. Either for economic reasons, the fact their workforce is more productive, or both. There’s no longer any need for a brick-and-mortar structure to support them.
This might change once COVID vaccines are approved and distributed. Come the summer, some businesses who thought they would stay digital might want to return to an office environment. Albeit, one that’s much smaller than their previous area.
We won’t know how the real estate industry in 2021 turns out until the start of 2022. Needless to say, it’s going to be a wild ride for a good portion of the year. Therefore, everyone interested in buying and selling should be ready for anything.