Now that we are in the second half of this year, it is a good opportunity to take a look at the challenges affecting the real estate industry in 2020. The Canadian real estate market is one of the hottest housing markets in the world. However, the issues arising from the beginning of the year have caused many challenges for those who work in the industry. This article provides an overview of the main issues faced by the real estate market in 2020.
The Greatest Challenges Faced by Real Estate Industry in 2020
The Covid-19 Pandemic
As expected, Covid-19 is at the top of the agenda. The pandemic is one of the hardest challenges the world has ever faced. Many economic sectors, the real estate industry included, have been impacted by the pandemic in different ways. Many businesses in different parts of the country have been closed in an attempt to flatten the curve. The statistics show that house sales were considerably down in April compared to the last year. Many buyers decided to put off their purchases until the economic condition became stable. Besides, other factors such as a higher unemployment rate and a slowdown in tourism have indirectly impacted the real estate transaction rate.
Despite the uncertainty about the future of the market, people still sell and buy properties for various reasons. The new demands of the market lead the majority of real estate agents to abandon the old sales and advertising habits and adopt new ones. Consequently, many agents have quickly replaced traditional open houses with real estate virtual tours. Considering the rapid evolution of the virus in recent months, it is predicted that it will take at least a few years to recover the real estate industry from the effect of the disaster.
Long before the outbreak of Covid-19, the affordability issue resulting from the lack of housing supply was a big issue in the Canadian real estate industry. In recent years, the prices of Toronto properties have risen, fallen and then risen once again. Since the outbreak of Covid-19, a significant decrease can be seen in the number of properties listed for sale, which results in a steep rise in prices. Thanks to the tight supply of what is considered reasonably priced houses, many buyers are increasingly finding it difficult to find affordable cases in Toronto.
The movement of people across international borders is one of the most important real estate industry drivers. Once everybody could move to another place for various reasons (immigration, education, business travels, tourism, etc). Considering the risk of infection as well as the costs of moving, however, it seems that movement is only possible for wealthier households. A drastic decrease in the number of immigrants and tourists in addition to the behavioural changes caused by the world pandemic has reduced the demand for housing and as a result, decreased productivity in the market.
Though using technology in business was an advantage once, it has become mandatory these days. All those having a job in real estate need to keep up with advanced technology or they’ll lose a significant portion of sales. This includes the technology employed in the real estate industry and the smart technology used in the construction industry. Realtors are turning to video marketing and virtual home tours to market their listings instead of open houses. The majority of buyers view the houses online before making an actual visit.
It is predicted that the real estate industry will face even more changes and challenges in the upcoming year. Providing quality services is still a top priority for agents. Whoever wants to last in this industry needs to adapt to the current market trends.
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