The impact of the COVID-19 virus continues to have widespread implications for individuals, businesses, and industries; as many face the loss of employment and income, the ability to pay for rental or homeownership costs has become a pressing issue. Here, we’ll be sharing the latest updates for renters, homeowners, and the real estate industry, as the health crisis develops.
COVID-19 real estate news highlights, by week:
Week of March 30 – April 3, 2020
COVID-19 Has Noticeable Impact on March 2020 Real Estate Market in Toronto Region
The Toronto Regional Real Estate Board (TRREB) released their March 2020 report on Friday, April 3, indicating that March sales were “clearly driven by the first two weeks of the month,” before emergency measures were introduced and when buyers and sellers were still gearing up for what was expected to be a busy spring market.
Leading up to March 15, there were 4,643 transactions across TRREB, which was a 49 per cent increase compared to the same two week period the year prior.
However, with the measures around COVID-19, including social distancing, sales dropped in the second half of the month. There were 3,369 sales reported from March 15 – 31, in what TRREB characterized as the “post-COVID period,” which is 15.9 per cent lower than the same period last year.
The average home price across TRREB remains stable at $902,680 compared to $910,290 last month and still represents an annual increase of 14 per cent.
Real Estate Still an Essential Service in Ontario
On Friday, April 3, the Ontario government updated their list of essential workplaces. Real estate agent services, and land registration services remained on the list.
Updates included only allow critical construction projects to continue, including “industrial projects such as refineries and petrochemical plants and infrastructure projects such as new hospitals, roads and bridges.”
Residential construction projects can also continue where:
- a footing permit has been granted for single family, semi-detached and townhomes
- an above grade structural permit has been granted for condominiums, mixed use and other buildings, or
- the project involves renovations to residential properties and construction work was started before April 4, 2020.
Canadian Banks Receive 500,000 Requests for Mortgage Deferrals
The Canadian Bankers Association reported nearly 500,000 requests have been submitted by borrowers to defer or skip mortgage payments to Canada’s largest six banks (RBC, TD, BMO, CIBC, Scotiabank and National Bank of Canada) over the past two weeks. So far, the banks have allowed customers to defer payments on over 10% of the mortgages in their portfolio.
Week of March 23 – 27, 2020
The Bank of Canada Makes 2nd Emergency Rate Cut in March
The Bank of Canada (BoC) cut its Overnight Lending Rate by 50 basis points on March 27 from 0.75% to 0.25% – the lowest it has been since April 2009 – as
The rate cut was made to help keep the cost of borrowing low, and consumer spending flowing, during a time of economic downturn and upheaval. Stated the BoC, “The intent of our decision today is to support the financial system in its central role of providing credit in the economy, and to lay the foundation for the economy’s return to normalcy.”
Real Estate Named an Essential Service in Ontario
In the evening of March 23, the provincial government released a list of businesses and industries deemed as “essential” as part of the current State of Emergency, and included real estate agent services, moving services, and land registration services among those that did not have to close operations. However, as both provincial and municipal real estate boards and associations have made clear, this does NOT mean it’s business as usual for the industry.
The Ontario Real Estate Association (OREA), a provincial lobbyist group, has urged brokerages and agents to stop all face-to-face business. This includes:
- Holding open houses
- Having public office hours
- Having agents come in person to a brokerage office
- In-person showings and inspections
As well, it has been strongly recommended that homes with rental tenants dwelling there not be shown or listed for sale as long as current health advisories are in force.
Stated OREA President Sean Morrison, “As Realtors and community leaders, we must do our part to help limit the spread of COVID-19. Why put your health on the line – or the health of your client or community – for showings that can simply be postponed for a few weeks? It’s not worth the risk.”
For clients with an urgent need to buy or sell a home, or close a transaction, agents are directed to keep business dealings as virtual as possible, including paperless documentation, and avoiding in-person viewings of the property.
The Toronto Regional Real Estate Board (TRREB) has issued a similar recommendation “strongly advising members to refrain from face-to-face real estate practices during the State of Emergency as they continue to satisfy their ethical duties to their clients.” They recommend alternative strategies such as video or virtual tours – but only on an absolutely as-needed basis.
“This was primarily to ensure people who had already bought or sold a home, but are still in the process of finding a new home or selling their existing property, were not left in limbo during the provincial shutdown,” TRREB states.
The board has also announced it will not enforce its MLS rule that suspends property listings that are not available for showings or inspections as long as the government health advisory is in effect.
Some Homeowners May Be Able to Defer Their Mortgages Up to Six Months
As the economic impacts of COVID-19 continue to deepen, more Canadians are worried they won’t be able to pay their shelter costs; according to a survey conducted by Angus Reid between March 20 – 23, 34% of respondents said they’re worried they’ll miss a rent or mortgage payment this month, with 44% saying they’ve lost work, or someone in their household has due to the pandemic. An additional 18% also stated they expect to lose their source of income soon.
To help counter these effects, Canada’s six biggest banks – BMO, CIBC, National Bank, TD, RBC, and Scotiabank – have announced they will provide mortgage holders who require financial assistance due to the impact of COVID-19 with up to six months of mortgage payment deferrals, on a “case by case basis”.
The deferrals are available to borrowers in good standing who have experienced a loss in income due to the economic impact of the virus, or due to being unable to work because of illness or the need to socially isolate. Those who must stay home from work to provide childcare are also eligible.
Those who wish to access a deferral must reach out to their lender directly to see if they qualify, however, as the type of assistance – and the qualifying criteria – appear to differ from bank to bank.
The announcement comes after federal Finance Minister Bill Morneau implored lenders to provide homeowners with relief in efforts to avoid widespread mortgage defaults as a result of the economic impact of COVD-19 – a huge issue witnessed in the U.S. during the 2008 – 2009 recession that led to the widespread need for bank bailouts, and Americans losing their homes.
However, these deferrals are not free money – the mortgage loan will still continue to accrue interest over the deferral time frame, which will be added to the loan’s overall outstanding balance and to be paid in either future monthly mortgage payments, or reworked into the loan upon renewal. The program is proving to be in high demand – according to the Canadian Bankers’ Association, lenders have fielded more than 213,000 requests for mortgage deferrals since the measure was announced on March 17.
Potential Relief for Tenants
While rental tenancy advocacy groups have been calling for similar payment relief to apply to the rental market, that hasn’t yet become a reality. However, there have been some protections announced for renters at various provincial levels across Canada.
In Ontario, a freeze has been placed on all evictions, with Premier Doug Ford stating that while those who can afford to pay rent should continue to do so, those who are unable due to COVID-19-related reasons will not be removed from their homes, and that financial resources should prioritize medical and essential services.
The British Columbia government has taken similar measures, announcing a moratorium on evictions for non-payment due to COVID-19. As well, the province will be providing a $500 monthly supplement for three months for renters who’ve experienced a loss in income but don’t qualify for existing rental assistance programs, which will be paid directly to landlords.
Your Ontario Property Tax Bill Could Be Delayed
In addition to its relief measures, the Ontario government has also granted municipalities the power to delay collecting property taxes from residents for three months. This is due to how cities’ payments to school boards are structured, which are due every three months; under the change, they’ll be able to put off this payment until June 30, freeing up $1.8 billion in cash, that the province is urging them to use to pass along the deferral to homeowners.
While it is still to be determined which municipalities will put the deferment into effect, it’s most likely Toronto real estate owners will benefit, as the City has already confirmed it’s in the process of putting a deferment into place, while other cities have already implemented a 60-day property tax delay for their residents.
Be sure to check back weekly for the latest COVID-19 real estate developments.
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