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How will Coronavirus affect the Real Estate Market

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LightningHelix

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Just looking for a few opinions.

How do you guys think the real estate market is going to be affected by Coronavirus?

I've heard that Real estate usually trails economic effects, is there a month window or so after we hit bottom on investments, that we will see the bottom of real estate?

Looking for a good opportunity to get into income properties, but I know several of you are much more experienced in this than me.
 

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MoneyDoc

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Just looking for a few opinions.

How do you guys think the real estate market is going to be affected by Coronavirus?

I've heard that Real estate usually trails economic effects, is there a month window or so after we hit bottom on investments, that we will see the bottom of real estate?

Looking for a good opportunity to get into income properties, but I know several of you are much more experienced in this than me.
The market in Canada is actually rising because of the virus. More people are "fleeing". However, I expect a very big correction as soon as everything is settled down in a couple of months. The market prices are absurd. Top investors are not buying anything.
 
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LightningHelix

LightningHelix

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The market in Canada is actually rising because of the virus. More people are "fleeing". However, I expect a very big correction as soon as everything is settled down in a couple of months. The market prices are absurd. Top investors are not buying anything.
Thats surprising.. You think there is any reason why the virus would cause an increase in price?

Do you think it's the same for United States?
 

MoneyDoc

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Thats surprising.. You think there is any reason why the virus would cause an increase in price?

Do you think it's the same for United States?
My uncle is a real estate investor and he says people are literally "fleeing" from China and Iran. Most are coming to Canada or are trying to get their families to Canada. Not sure how credible this is but he's a big time player in Canada's market. With that said, prices are extremely high and do not make any sense at all. The one's in the "FOMO" stage are buying, which in my opinion is a big mistake. 30 year old homes in good areas are selling for $200k over asking. Does the area warrant that much of a price? Hell no. Even land prices don't make sense. The ones developing now are doing so because they've purchased the land years ago. In my city, I don't know of one developer that has recently bought land to build.

Not sure about the US market.
 

Bekit

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With that said, prices are extremely high and do not make any sense at all. The one's in the "FOMO" stage are buying, which in my opinion is a big mistake. 30 year old homes in good areas are selling for $200k over asking. Does the area warrant that much of a price? Hell no. Even land prices don't make sense. T
Maybe people who are pulling money out of the stock market are putting it into real estate?
 

biophase

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Personally, I think real estate will begin to decline. However, we won't see it begin decline until 6-8 months from now because sellers are usually oblivious to market changes. They will keep their asking prices up until the properties sit for a long time. Then eventually they will start to lower prices as their real estate agents begin to tell them what the market is doing.

I think investors who've been there and done that will wait and wait. Everything is so uncertain now. I'll probably wait at least until 2021 to do anything now.
 

MoneyDoc

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Personally, I think real estate will begin to decline. However, we won't see it begin decline until 6-8 months from now because sellers are usually oblivious to market changes. They will keep their asking prices up until the properties sit for a long time. Then eventually they will start to lower prices as their real estate agents begin to tell them what the market is doing.

I think investors who've been there and done that will wait and wait. Everything is so uncertain now. I'll probably wait at least until 2021 to do anything now.
I'm 100% with Kenric on this. I really feel like the end of this year we'll see a decline. Stress test for mortgages is getting easier this April in Canada, so prices will be on the rise and again, FOMO will kick in literally forcing buyers to buy.
 

DaRK9

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My uncle is a real estate investor and he says people are literally "fleeing" from China and Iran. Most are coming to Canada or are trying to get their families to Canada. Not sure how credible this is but he's a big time player in Canada's market. With that said, prices are extremely high and do not make any sense at all. The one's in the "FOMO" stage are buying, which in my opinion is a big mistake. 30 year old homes in good areas are selling for $200k over asking. Does the area warrant that much of a price? Hell no. Even land prices don't make sense. The ones developing now are doing so because they've purchased the land years ago. In my city, I don't know of one developer that has recently bought land to build.

Not sure about the US market.
That’s interesting considering how they handled SARS.
 

mikemiller

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Aug 19, 2019
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Hi,
The coronavirus will bring a great impact when it comes to the real estate industry. I recently went through this blog which was very useful. I hope it helps you too!
 

TFF123

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Dec 8, 2019
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Money has to go somewhere. It has come out of the stock market... and initially went to bonds. But now bond yields are almost non-existent and bank rates are just as bad.

For those (few?) without financial struggles, I'd expect them to be eyeing up property markets in the next few months as forced sellers begin to emerge.
 

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MooreMillions

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I am curious as to how this pandemic will divorce banking from real estate and commercial real estate from corporations not involved in real estate.

Almost 20 years ago I informed my employer, via a focus group, that teleworking is the future so why not start now. It was a logical progression to me because I was consulting homes and small businesses on installing cable, dsl, satellite, and VPN’s.

They heard me, but shrugged it off due to it not being imminent. Well, now it is imminent. Google has led the way, with Twitter close behind, on employees working from home indefinitely.

Once high speed hit homes, I was wondering why companies would not want to take the rent money they pay to landlords every month and reinvest in remaining parts of the business.
At minimum it is tens of thousands of dollars every 30 days to pay for employees not being there a minimum of a 3rd of the time plus weekends.

Why would any business in a capitalists society pay for something it just doesn’t have to? Kickbacks?
Just my thoughts.
 

Devampre

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I'm watching the prices of many properties in my province in 5 different areas. Still haven't really seen any large changes to any listings just yet.

I am kind of hoping to find a good deal for myself.

One thing that was crazy to me (a noob) was the price difference between two properties in one of the cities.

There's a single two bedroom condo unit for $1.1 million and a two bedroom trailer home for like $25,000. I understand the differences and a bit of the "why's." However, from a fundamental perspective as a means of shelter, this kinda blew my mind. Especially since both are in low crime areas and the trailer home is actually closer to the University.

I don't claim to know everything or all the details, but I just thought that was interesting.
 

JScott

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I wouldn't trust any real estate data in any markets right now. Real estate markets are tremendously inefficient, as there are a lot of buyers and sellers sitting on the sidelines waiting for things to open up again. When markets are inefficient, you can't rely on values to be accurate.

Once things start to open up again, we'll see where values move. For residential, I expect that that there will be less inventory than expected early on after we start to open, with a decent amount of demand. That should keep prices propped up for a few months. After that, it will depend on where the economy heads, in general.

Right now, most real estate indicators are strong -- foreclosure rates are low, forebearances are about 25% of where they were anticipated to be, mortgage debt is at reasonable levels, and lending is starting to loosen up a bit. That can change further down the road, but short term, things are probably pretty resilient.

As for commercial, office space is going to have a rough time, retail is likely to have a rough time, and hospitality (hotels, for example) is likely to have a rough time.

Multi-family will likely be pretty resilient, unless the economy really tanks. We'll see risk premiums rise, leading to slightly higher cap rates, but all other indications are that multi-family won't see a major downturn until things start to snowball.
 

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