Ontario is in lockdown again due to COVID-19. As of December 26, most non-essential services and businesses across the province will be closed. These restrictions will remain in place for all of Ontario until January 9, 2021 and for Southern Ontario until January 23, 2021.
Fortunately, real estate is considered an essential service, which will soften the blow on homebuyers and sellers. However, many activities and services related to real estate will be restricted due to the lockdown.
Let’s take a closer look at what lockdown means if you are buying or selling a house in London, ON, or in other areas of Southwestern Ontario at this time.
Specifically, we’ll focus on:
· What real estate activities are allowed during lockdown
· How restrictions will change the way homes are bought and sold
· How the lockdown will affect the real estate market
· What to expect in terms of the lockdown’s impact on real estate throughout 2021
What’s allowed in real estate during Ontario’s lockdown?
As mentioned, real estate is an essential service in Ontario. This means that realtors can keep operating and real estate transactions can continue as before. Likewise, the construction sector is also an essential service, so construction work on homes and condos will not be affected.
But some things will change for the real estate industry. Perhaps the biggest impact is that open houses are prohibited. Scheduled in-person showings are still allowed, but they should only be used when absolutely necessary. The Ontario Real Estate Association (OREA) has a guide on when and how to conduct in-person showings safely.
As is the case with all workplaces that are deemed essential services, real estate offices must implement certain safety measures, including:
· Screening visitors and workers before entering
· Wearing personal protective equipment (PPE)
· Capping the number of people admitted into offices so that a 2-metre distance can be maintained between everyone
How will lockdown affect selling a house in London, ON?
The major change if you are trying to sell a house in Southwestern Ontario at this time is that in-person showings may drop considerably. But the sector is better prepared for this disruption than it was during the first lockdown.
Digital tools are extremely useful during this time. After the experience of the first lockdown, many realtors and home sellers are already setup to handle this change. A digital showing is not as novel today as it was during the spring lockdown. Many realtors will now have the tools and experience to conduct digital showings effectively.
If a prospective buyer insists on an in-person showing, however, more safety measures will need to be implemented by the realtor or home seller. This includes disinfecting all surfaces, wearing PPE and maintaining 2-metres distance between people.
As we’ve pointed out before, if you are concerned about showing your home during the pandemic, one way to minimize your risk is by contacting a real estate investor. That way you can sell your house in London, ON, off-market, which allows you to minimize your exposure to other people while still getting a great rate on your home.
What will happen to the Southwestern Ontario real estate market?
There will likely be some effect on the Southwestern Ontario real estate market because of the lockdown. The prohibition on open houses and the decrease in in-person showings may push some prospective homebuyers to delay their buying decision until after the lockdown ends.
However, there are reasons to believe that this lockdown’s effect on real estate will be limited, especially when compared to last spring’s lockdown.
For one, the lockdown is coming at a time of year when real estate sales are low anyway. December and January are typically the slowest months of the year for real estate sales. The current lockdown will have much less of an impact on total sales for 2020 or 2021 than if it came during the more active spring and summer seasons.
Second, because real estate is an essential service, transactions that were already in process just prior to lockdown should have no trouble closing.
So, while it’s reasonable to expect a slight dip in home sales in Southwestern Ontario during lockdown, overall the impact shouldn’t be too severe.
Will there be a long-term impact on home sellers in London, ON?
Looking beyond the 4-week lockdown, you can take comfort in the fact that the real estate market is expected to remain very healthy throughout 2021. The Canadian Real Estate Association (CREA) predicts that home sale prices across Canada will rise by 9.1% in 2021, with Ontario seeing the biggest increase in the country at 16%.
It’s also worth noting that most of Ontario’s increase is coming not from areas in Southern Ontario outside of Toronto. This includes Southwestern Ontario, where towns and cities like London, St. Thomas, Woodstock-Ingersoll and Brantford have seen prices rise by over 20%, among the highest in the province.
One caveat to mention is that actual sales activity is expected to decrease in Ontario in 2021 by 3.3%, making the province the only one in Canada which is predicted to see a decline in total home sales. However, this is not a sign of weakness in the real estate market, but actually an indication of its strength. Total sales are likely to decline simply because inventory is low.
In other words, home sales have been so high in recent years that there are now fewer homes available to go on the market. Hence, although sales may decline, prices will continue to rise.
Another reason that the lockdown will have very limited impact long-term is because, as mentioned, construction is an essential service. New residential developments will continue to be built, which will help address the supply issue somewhat.
Finally, we know from the first lockdown that the real estate market is capable of rebounding quickly. While the rebound is likely to be less dramatic this time around that is only because this lockdown’s impact on real estate is likely to be limited.
So, to sum up: lockdown will affect real estate, but mostly in terms of open houses and showings. For an even more secure way of selling your home in Southwestern Ontario during this uncertain time, talk to a real estate investor. An investor can help you take advantage of the current strong real estate prices in Ontario, while also minimizing the need for open houses or showings.