We believe COVID-19 will change home buyer habits in 2020 and beyond.
COVID-19 struck Toronto, and the world for that matter, in a way we could never have predicted. We went into self-isolation in mid-March. We were adapting an incredible speed of new information and more questions than we had answers. As we transition back into public life, begin to open our businesses and industry again, the world seems like a different place. At the very least, the world and how we choose to interact with outdoor space and people have likely changed for the foreseeable future.
The pandemic self-isolation period had us shift into a mode that highlighted what we love about our living circumstances, and what we find less desirable. Despite being the early days of the Coronavirus, we have learned a lot that will impact what we purchase for the years to come.
A key learning through COVID-19 has been that the pedestrian space and how we interact with it has become a significant point of focus for home buyers. We have all become profoundly aware of spatial and social distancing through this pandemic.
We envision Millenials, who are beginning to start families, being key market influencers in the next few years to come. The insight is not in the fact that they are beginning to have families but in that they will likely be making different decisions about what living space they will acquire due to the learnings this pandemic has provided. Could they shift from city focus to suburbs? Not only for more affordable properties but for larger homes in more spread out neighbourhoods may draw their attention, particularly if they continue to work from home.
Considering that businesses provide incomes and ultimately impact a buyer’s purchasing habits. We briefly touch on how business has changed, then touch on how buyer’s condo and home buying habits will change for the foreseeable future. What is the foreseeable future in our minds? Perhaps the next 3-5 years – time enough to have a COVID-19 vaccine and allow for other countries to be vaccinated, thereby permitting more airline travel which will allow business and vacation opportunities to increase.
To predict the outcome of face to face business in the near-term is difficult. What we do know and can expect are the following:
- Videoconferencing and other technology to facilitate workflow have officially become mainstream and an acceptable way to work with teams and clients.
- Working from home can be productive. Especially productive once children are permitted to return to daycare and schools.
- Office buildings are restricting the number of people in an elevator at any one time, thereby making getting to work a challenge.
- Office and other commercial vacancies are increasing due to businesses being closed down despite government efforts to subsidize and support
- Companies are rethinking layouts of office space, and the number of workers in the workspace at any given time. Hoteling of desks will likely increase – borrowing the idea from the shared workspace popularized by companies like WeWork. Does this equate to a twenty-five percent decrease in necessary office space? This would undoubtedly keep overheads down.
The above call into question whether corporations will want large office spaces in cities. Will these businesses limit workers to two or three days a week at the office while the other days working from home?
Will purchasers choose space over proximity to work? So many questions to explore in the months and years to come.
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For those who lived in condos during COVID-19, you likely learned a lot about the realities of the usage of space. Some buildings restricted numbers of residents in elevators, and some buildings did not permit visitors (or Realtors for showings in some cases). We heard from our clients that concern over pushing floor buttons, walking down hallways and funneling our of condo building front entrance caused some stress.
What we expect in the future is that people making condo purchases will want more boutique, lower rise buildings – because elevator lines won’t be as long and that fire staircase can realistically be used. We expect eight floors to be a more common preference. Historically speaking, condo developers have charged more per square foot for higher levels, which have continued in the resale market. However, we can envision lower floors beginning to increase in value. Buildings with balconies and terraces just went up in value. These have long been exceptionally difficult to evaluate – these values were based more on intrinsic value versus a cost per square foot of outdoor space. We expect that the intrinsic value has just been pushed up a few notches.
The idyllic imagery of sitting on the front porches has a great draw after many condo dwellers were stuck inside. Images of families playing catch in backyards, bare feet on grass, the choice to walk out of your home with space to get to the street, with no bottleneck to the sidewalk the more densely populated neighbourhoods of Toronto have. Notice any particular theme here? These are precisely what suburbs have been advertising for decades. Will the suburbs and possibly even countryside lifestyles begin to see a rise in buyer interest? With the increased adoption of technological use for businesses and the likelihood that how we work together may evolve, this is possible.
That being said, we do not doubt that those who lived in smaller houses will pine for larger homes in the wealthiest neighbourhoods even more than they ever have. Those in condos will want larger condos. And those who can afford to have a country home or cottage will commit to that purchase they have dreamt of. Space will once again become king versus proximity to work.
Lastly, we envision the forever home being in hot demand far more than we have ever seen. Therefore expect the luxury market to perform well as we move forward. The forever home typically is the larger property in a less densely populated neighbourhood.