Not Business as Usual: Real Estate in London, ON

I wanted to come back to you with a quick update on what's going on in the real estate market as it relates to the coronavirus and just some updates on the economy as well. So, recently I put a poll out on my Instagram account, that asked should realtors be working in the midst of this COVID-19 pandemic? And 73% of you said that we shouldn't and the rest of you were realtors…. Just kidding.

Realtors: An Essential Service

We've been deemed an essential service, that's been deemed by the Ontario government. Our governing body haven't explicitly told us to stop working, but they've certainly made it very, very clear that it is not business as usual. All face to face interaction should virtually not happen. They haven't come out and said it, but you shouldn't really be selling real estate at this point in time. It's more if you have clients that have already bought or sold and they are now waiting to close somewhere in the future. You need to help those clients.

Closing? Expect delays.

There's certainly gonna be situations where there's delayed closings, particularly as it relates to builders, as a lot of sub-trades have been deemed to be non-essential. Builders are now not gonna hit the timelines that they need to hit. There might be delays elsewhere as well, whether it's from a funding standpoint for people who have potentially lost jobs that are now in a situation where the bank is saying, if you're not employed, we are not going to fund this mortgage, you should ask for an extension on that. I've heard of a situation for a seller who is supposed to go into an old age home who actually couldn't, because they were not accepting anybody - nobody was going in or going out except for the absolute necessity. So, they had to delay their closing.

There's this whole ripple effect that we need to help clients through and it doesn't mean that we're supposed to be out there trying to actively sell real estate.

Relief Measures for Homeowners

So what I've been doing with a lot of my time is I've been trying to read a lot and watch a lot of videos and take part in webinars as well to just get my mind around what is going to happen here in the economy and what may happen in the real estate market. In my last post, I touched on this whole idea of the government trying to really support, whether it's through providing EI, whether it's putting pressure on the banks to offer us deferrals, which we've now seen the big six banks do, and we've also seen that trickle down to the smaller lenders as well.

And what I would add to that is this idea of deferral on your mortgage payment, it's awesome for those of you that actually need it. And the majority or a large portion of Canadians are going to need that program because they may not be able to pay their mortgage payments and we don't know how long this may go on, but if we look at other countries that are now starting to come out of it, I think it's easy to see that this could be a three month kind of hold on things where the economy is just kind of shut down and people aren't working.

So, deferring a mortgage may be something that is really, really necessary. With this six month deferral you are essentially kicking the can down the road and they're gonna charge you interest along the way. It's not free, you don't just get to say, “Yay, I don't get to pay my mortgage for six months.” In fact, there is a cost to it. For those people that can manage to pay their mortgages throughout this economic shutdown, you should do that, because it's going to cost you money otherwise.

Outside of that, what we've also seen is the government really push to support employers and all the small businesses out there that have employees. As an employer, I think when you hire someone, you essentially make a promise to your employees to say, listen, I'm gonna support you, I'm gonna pay you, I am going to help you keep food on the table. So the thought of laying off somebody like that is just so, so tough. But the government is there, saying we'll help you, we will support you as an employer to try and keep these people employed versus having them on EI - which we've already seen over 500,000 Canadians apply for since this COVID-19 pandemic has hit Canada.

I think if you've got employers that are on the fence about keeping their employees, something like the government coming alongside of them and partnering with them to keep those people employed and support them financially is gonna make a huge difference because the last thing they wanna do is lay people off. Especially small business, where the person that owns the business and is making that decision is also the same person that's sitting in front of that employee telling them that they are laying them off during this time.

Some encouragement

As more and more information comes out about what our government is doing for our economy and from the health side of things, I have to feel super grateful for how proactive our government has been. And when I look back to 2008 and I look at how well the Canadian government handled that economic recession and how well Canada came out of that… I remember thinking at that time how grateful I was, especially when I compared our country to the United States. They took so, so long to come back. And then, I look at it now, and again, I compare it to our neighbours South of the border, and I think they're gonna be hit in a much worse way than we will be, not only from a health standpoint, but also from an economic standpoint. I feel like our government has done such a good job of being proactive on getting out in front of these things. And don't get me wrong, it's not like the future is a super clear picture of where we're going to be, it's still very uncertain and up in the air, but I would say that I would have to feel very, very positive and very, very fortunate to be living in the country that I do and how our government has dealt with this.

Final thoughts

So, I would say the real estate market is basically shut down for now. Now, I take it as my opportunity to get some projects done around the house, hang out with my family, and one of the quotes I read the other day was from Martin Luther who said, "Let joy be your act of defiance." And I loved that quote, especially in this environment. And I think it's very easy to be fearful and be scared, and don't get me wrong, there's elements of that that creep into my life. There's potentially economic impact for our family as somebody who is self-employed, as somebody who is a landlord and has tenants that may be unemployed, these are all things that I am dealing with and working through. But at the same time, I look at it and I think, man, I've basically been forced to stay at home and hang out with my family, and it reminds me more and more on how grateful I am for my wife and how grateful I am to have these five little kids running around here. Today, we just went for an awesome hike out under the blue sky and the bright sun and the warm weather, and what a blessing that is to be able to go and do those things and to not think, I gotta work. That's something that always hangs over me a little bit and I've basically been forced to say, listen, you can't. You can't work right now.

And I hope that you guys as well can find the joy in this time. I know it feels tough at times, but it is there, so I'm gonna leave it at that for tonight.

If you have any questions or anything you would specifically like me to address, then I would love to do that.

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The Coronavirus: COVID-19 and The Impact on the Real Estate Market in London, ON

First and foremost, I hope you are staying safe, healthy, and doing your part to socially distance and flatten the curve. These times are uncertain and unprecedented. I wanted to address some concerns buyers and sellers may have, as well as fellow Realtors. 

This is a quick update in the midst of the COVID-19 pandemic that we're experiencing. How is this crisis impacting the real estate market here in London, Ontario?

What might we be able to expect going into the days and weeks ahead?

I think one of the key things that we're seeing is some confusion not only from the public, but also from realtors. Realtors don't really know exactly what to expect. We've had such an active market here at the beginning of the year and it's been such a dominant sellers market that we kind of know the lay of the land. But now, all of a sudden, with this pandemic that we're seeing, we're beginning to see the possibility of the economy kind of come to a screeching halt, at least for a short period of time. We don't know exactly what to do.

What we do see right here on a day to day basis, is we still see that there is a ton of demand in the market. For the properties that are listing, they're still selling in multiple offers. I look at the MLS and there's still tons of realtors that are listing properties. And when I talk to the staff at our office who are processing the deals on the back end of things, they are still telling me that there are a lot of deals that are coming across their desk and it's like nothing has changed.

So will it change here in the days and weeks ahead? I expect that it will.

For sellers, I think there's still a window of time where you can get your property on the market and get it sold. There's certainly policies that we have to follow. For example, we are not doing open houses, we will do a virtual open house. And even with private showings, there are processes that need to be gone through. No doubt, I think there's a pool of buyers that were on the market that have just taken themselves out for now; they aren't comfortable going into other people's homes, and there are certainly sellers that are not willing to put their properties on the market. For me, that is completely understandable. As far as the opportunity goes, I still think it's there, but I think that may end in the near future. If you are considering putting your property on the market right now, I think you can still get away with it. There's certainly enough demand there.

“What do I do if I've bought a house, or I'm in the process of buying a house and there's a possibility that the economy is gonna see a pull-back?”

I think that when you ask yourself that question, a lot of it has to do with your employment. I certainly have some buyers that are kind of in the manufacturing side of things, and that seems a lot more uncertain right now, versus someone that might be working for a government organization such as at LHSC or for the University, or something with a bit more job security. There's some differences there and that is certainly impacting the buyers that are buying, and they can move forward with confidence if they have that stable job. If things seem a bit uncertain, then it's certainly creating some pause for them there. If we begin to see layoffs, especially if it goes for any extended period of time beyond a month, then I think that we will begin to see some pull-back in the market. I just don't know how long that's going to happen.

My prediction is that we will see a blip in the market for about a month or so, and then I think things will pick back up basically to where they are, and maybe even stronger given that people kind of held off for a while, even though that demand is really still there.

People still really want to move, and our inventory is still very low.

In fact it may even be lower when we hit the other side of this. The one piece that I do want to mention here is that the government is doing a lot to make sure that the economy does not see a big pull-back. The bank in Canada has decreased it's overnight lending rate twice; we've seen lenders decrease their interest rates on their mortgage and any sort of borrowing that they are doing. And now, just basically in the last day or two, we've seen the government come out and say “Listen, if there is a pull-back or there are layoffs then we are going to be subsidizing people's mortgages to say if you need it for a short period of time, whether that's deferring payments or capitalizing the interest on the mortgages, we can do that for a short period of time, up to six months.” I don't know the exact details of that yet, and it certainly shows the government's desire to help people not only through this situation, but also to make sure that the economy continues to roll the way that it needs to, and not to let this completely disrupt our economy and send us into a recession.

It's really just a disruption to the real estate market here in London and the surrounding communities.

Until we completely know what the lay of the land looks like, it makes it very difficult to say exactly what's going to be happening. I will try to give more updates like this as things unfold. If you have any questions, I would love to answer them if I can. If you have any thoughts on this, I would love to hear them. If you're a Realtor that disagrees with me, I would love to hear those thoughts as well.

I hope that you're doing your part to socially distance yourself, to hopefully flatten that curve if we can still do that here. And I hope you're staying safe, and reaching out to those that are in your community, maybe not directly, but over technology and social media just like this. The more we stay connected and encourage each other, the less scary it seems, and the less fearful we need to be. We've certainly gotten through harder things in the past and no doubt, we can get through this together as well. Hopefully we can connect soon, take care.

Final Walkthroughs are Important

Just bought a house? GREAT! Remember to do a final walkthrough before closing day. Why? Let me tell you.

What is a final walkthrough?

A final walkthrough is a walkthrough that you do on a property that you’re purchasing. Typically, the walkthrough happens the day before closing, when the funds exchange hands and the property legally moves from the sellers to the buyers and it becomes the buyers property.

Why do a walkthrough?

Basically, you want to go through the property, and make sure the property is being delivered to you as you bought it. That is to say, everything that’s supposed to be there is there, everything that’s supposed to be gone is gone, and the property wasn’t damaged in the course of them moving out. 99% of the time, everything is good. The property’s been cleaned up (there are provisions in an offer to legally make sure that happens).

A walkthrough gives you the opportunity to go through and test appliances, flip switches, flush toilets and run taps to make sure it is as it should be.

What happens if there’s an issue?

In the event that, for some reason, something is damaged or broken, or if there’s garbage left behind, the walkthrough gives you the chance to actually go and speak with the buyer’s lawyer to get everything sorted out.

For example, you could go to the lawyer and say “There’s been garbage left at the property, we think it would cost $500 to have it cleaned up, we’ll hold that money back at the time of closing”. Once the garbage has been cleaned up, and if it didn’t cost you $500, you can send the remainder of that money back to the sellers. By withholding that money, you ensure that everything is delivered to you as expected.

If you don’t do a final walkthrough, and you show up after closing and there’s garbage left at the property, there’s essentially no recourse. Over a few hundred dollars, you’re not going to pursue legal action because it will end up costing you more.

To sum it up

The final walkthrough is to not only catch little things like garbage, but if there were a large issue, you would want to be able to go to your lawyer to get it worked out before closing.

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