Are you uncertain how COVID-19 will impact your real estate investments?
Trust us; you're not alone. Real estate investors around the world are furiously watching the market, trying to determine how long the crisis will continue, and what the fallout will be once governments relax physical distancing guidelines.
The good news for investors is that, unlike many other industries, real estate has been declared an essential service in Ontario (as it should be). That means agents and investors can continue to do their jobs throughout the crisis, although things will be changing in the real estate market.
Adaptation is the name of the game in real estate investing, and there are some genuine opportunities for investors who are willing to look for them! If you're looking for ways to invest in real estate in the west end of Ontario, Regalway Homes has some advice for you!
Highly-Motivated Buyers and Sellers
Things are certainly not going to turn out as projected at the beginning of 2020.
In January, most reports anticipated the year to be a seller's market. The first two weeks of March looked like they were setting the stage for a record-breaking season. Since then, however, the rise of real estate prices has understandably slowed. Many sellers are holding onto their properties, hoping that prices will start rising again in the summer and fall. (Interestingly, the demand for condos is still hot in Ontario!)
Though the market is no longer red-hot, this doesn't mean there aren't people out there who are looking to buy or sell. The people in the real estate market right now are highly-motivated buyers and sellers who mean business. If you have the realty team to connect with them, the odds are excellent that you will be able to do business!
Virtual Showings (And Other Tech)
Real estate is one of those industries where agents and investors need to evolve or be put out of business by their competitors. Over the last few years, tech innovations such as decentralized offices, virtual showings, and even drone videography have dramatically changed the way that the industry does business and interacts with both buyers and sellers.
As a result of COVID-19, this tech shift will only accelerate. As offices have closed due to physical distancing rules, digital communication tools have exploded in popularity. Zoom, in particular, has seen a stunning rise since the beginning of March. Agents, investors, buyers, and sellers are using digital communication technology like never before, and we suspect this shift will continue long after the resolution of the coronavirus crisis.
One of the most significant changes now is how investors and agents show homes. With in-person open houses suspended for obvious reasons, we need to get innovative with the way we present our rental properties and other investments. Virtual open houses are going to become the norm, which means agents, investors, and landlords need to up their game in terms of the way they are presenting properties. Learning to better reach potential buyers on social media and engage with them online is now a necessity for success.
Lower Interest Rates
In times of financial crisis, the Bank of Canada often steps in to cushion the economy from the impact, and COVID-19 has been no exception.
Throughout March, the Bank of Canada dropped vital interest rates three times, to 1.25% to 0.75% to 0.25%. For buyers and investors, this translated to lower mortgage rates. The big six banks slashed their prime lending rate from 2.75% to 2.45%. All of this means huge savings on properties and cash flow.
One of the scariest parts of how COVID-19 has impacted our economy is in the stock market. At the beginning of the crisis, investors had to brace for bad news daily as stocks dropped, and investment opportunities dried up.
Thankfully, there is one safe haven, and that's real estate investing. While the real estate markets have taken a hit (as has everyone), the impact is much less severe than many were expecting. With the policy rate and mortgage rate cuts, conditions are favourable to expand real estate investment portfolios with both short-term and long-term rental properties.
If you're looking for a place to put your money right now, investing in real estate passively might be an incredible opportunity. Thanks to CERB and other fiscal stimulus measures, rental income looks to be holding steady for the foreseeable future, providing you with a stable source of revenue in this uncertain time. If you're looking for a place to invest, or you want to sell us a property, we'd love to talk with you! Contact us today, and we can discuss how COVID-19 has changed the game and how real estate investors need to change right along with it.
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