REAL TIME Episode 10: Hindsight is 2020
Erin Davis: Welcome to Episode 10 of REAL TIME. This is the podcast for REALTOR® brought to you by CREA, the Canadian Real Estate Association. This is where we talk about ideas surrounding Canadian real estate and topics that impact you as a REALTOR®.
I’m your host, Erin Davis, and because this is our final REAL TIME of 2020, we’re taking a little more time to review a year defined by twists and turns, and the resulting consumer confidence. Three respective experts are going to shed light on the impact of COVID-19, how the Canadian economy and housing markets responded, how REALTORS® like you have adapted and what it all means as we move into the new year.
We’re going to start with David Coletto with Abacus Data. David heads up one of Canada’s leading polling and research firms, and he joins us for REAL TIME. David, welcome. It’s so good to have you with us here today as we look back, look ahead, and just have a great chat. Thank you.
David Coletto: My pleasure. Thanks for having me.
Erin: Here we are at the end of, well, we’re running out of adjectives for 2020 let’s be honest, I guess unprecedented would be the word. Can you remind us what Canada looked like pre-pandemic? I mean, without masks?
David: I think if you take a quick snapshot, pre-COVID, you saw unemployment at historic lows around 5.5%. You saw consumer confidence, not through the roof, but certainly, above water. When you ask Canadians is Canada in a recession, only 30% felt that it was particularly out in the West and 42% thought now’s a good time to make a major purchase. You fast forward to today, and you’ve got unemployment close to 9%. Consumer confidence may be at the lowest it’s been in a long time. Almost everybody knows, not believes, knows we are in a recession, one that we haven’t seen in a very long time.
The public mindset, the consumer mindset, is in a very different place. There’s broad understanding of the challenges we face. There’s both I think a defensive posture, people are waiting for the worst, for the shoe to almost drop. That being said, there’s also growing impatience and maybe optimism that the vaccine is coming and that light is at the end of the tunnel. Every day I think is different given what new cases come out and what the new stories are, but I think there’s a collective hope that the end is near. That I think is guiding how people are feeling.
Erin: Yes, the end is near in a good way. Let’s qualify that.
David: Yes. This long dark period is over and the light is coming.
Erin: Feelings and perceptions aside, from the beginning of 2020 what was the economic reality? How was our economy? Was it healthy?
David: It was very healthy. We were seeing record unemployment. It wasn’t the fastest-growing economy we’ve ever seen, but we were growing. Parts of the country there was, I think still the case, but certainly in Toronto for example, there were more cranes building condos and new offices than in any city in the world. That might be still the case, but that energy is not as strong as it was, but it was certainly a good time for Canada, and all of a sudden everything changed when this virus started to spread.
Erin: David, what do you think changed most drastically since January, if you could pinpoint one thing?
David: I think the country really– because this was a health crisis first and foremost, I think there was an immense focus on the capacity of our health system on our own health. Were we ready? Was our system ready to deal with a spike in cases? The early days of the pandemic if you remember were focused on, did we have enough ventilators and ICU beds and personal protective equipment? All of that stuff was something we always– Healthcare is always a top issue in this country, but it became real and acute. Also, many Canadians who never experienced a sense of insecurity around food or household goods for the first time experienced empty aisles. Toilet paper not there. Yeast being impossible to find.
That was, I think, brought new light to how our food system is. I think more recently, there was already a real focus and worry about housing affordability in Canada. Particularly younger generations in larger cities, there was a sense that it was just impossible to get into the housing market. Something I know that REALTORS® are living with day-to-day. That has become even more real as housing prices have gone up around the country. I think those three issues, our health system, our food, and supply chains, and now housing were always top issues, but they’ve become the focus of our attention in terms of national big issues.
Erin: We’re going to be speaking with an economist coming up about the housing market because it’s just been an unbelievable year in so many ways. Speaking of homes, how have Canadian’s perceptions of home shifted since the beginning of the year in your opinion, David?
David: I think before the pandemic, we had seen lots of consumer data suggesting home was becoming more important. We were spending more time at home. We were able to entertain ourselves. The rise of streaming services meant fewer of us were going to the movies. Fewer of us were going to sporting events. We could do it all at home. Home became so much more. Now, the pandemic forced us to be at home for much more. It became the place we worked. The place we taught our kids. Our kids learned, if you had kids. You saw pictures going around Instagram of people baking bread and learning how to do sourdough.
This was all part of an entrenchment of home, and so home became and is everything. It’s always been important, but now it’s become everything and it plays such an important life, so much so that I think many Canadians have become acutely aware of the faults in their homes because they’re spending so much time there. Which I think explains the rise of home renovations and home improvement that we’ve seen since the beginning, as evidence that home matters now. People are really focused on their home and are thinking about how to improve it and integrate it even more into their lives.
If we weren’t already home-bound, we’ve been forced to be home-bound and we’ve tried to adapt and deal with it and make it even more comfortable than it may already have been.
Erin: Part of that, of course, has been so many of us working from home. It’s become everything to us. It’s become the gym, the restaurant, the bakery, as you mentioned, and, of course, the office. How have Canadians adapted in terms of technology or new ways to carry about our day-to-day life?
David: I’ll give you an example. We’re just in the field now with a survey asking Canadians about their holiday shopping experience. I think it points to what we’ve seen that has been a rapid shift towards all things digital. I think we were seeing, again, that– I’m one who believes that the pandemic is not going to fundamentally change everything, but it’s going to accelerate so much of our lives, the things we would have been maybe five, six years from now are now only going to take a year to get there. I think that digital experience using technologies in new ways is one of them. That example I used of holiday shopping, when we asked Canadian adults last year, “How did you shop online versus in-store?”
Canadians are reporting that last year they spent about two-thirds of their shopping dollars in-store, only a third online. Then we say, “Well, what about this year? How do you think that’s going to split?” 60% online, 40% in-store. That’s just an example of the wholesale shift we’ve seen because we’ve been forced to, and even as we record this, many parts of the country are now locked down, stores are closed, we have no option. I also think it’s accelerated the shift that we were seeing with younger generations towards online grocery shopping, online food delivery, home meal kits, more and more of the things we buy being delivered to home.
I think the gaps between generations, I think of my parents who are in their mid-60s, who we describe sometimes as digital immigrants because they weren’t born with technology. I think we’re far more similar now in how we use technology to communicate and learn and entertain ourselves than we were at the start of this pandemic. That’s going to be one lasting legacy and it’s affected how we work, how we engage with people. Heck, over the Easter break, for years my family would get together on Good Friday. We’re Italian so Good Friday is a big fish dinner and we did it by Zoom this year.
The first time it was chaos, it was exhausting, but that’s an example of being forced into using technology and bringing actually more people into that dinner than would normally show up because we could connect people in Italy and all across the country.
Erin: Oh, you’re kidding. With Italy as well?
David: Yes, we never did that before. We never even thought of it but now we were all there. Actually, it changed the tradition a little bit and we were able to bring a global family together as opposed to just those in and around the GTA.
Erin: Isn’t it wonderful that something that has isolated so much has brought us together in so many ways too. What has surprised you about how Canadians have responded to the pandemic, David, or has the data laid this out to you and you could have said, “Yes, I would have expected this.” What surprised you?
David: I think one thing is just how much of rule followers we are. At least, we’ll see whether the second spike in infections maybe proves this point wrong. I was having a conversation with an ambassador from a European country last week, and we were talking about the experiences in her country and experience in Canada. She couldn’t help but just be amazed by how well Canadians just follow advice and are wearing masks and aren’t rising up against this kind of stuff. That I think, maybe surprised me just how different our culture is here in Canada. I studied political science, we were always told, Canada was built around peace, order, and good government. Americans were about life, liberty, and the pursuit of happiness and you see those contrasts.
The second thing that’s I think, important, and surprised me is the two Canada’s that really emerged out of this pandemic. It’s more of an economic consequence that we’ve talked a lot and we’ve put a lot of attention on about one out of four Canadian households that have been severely impacted by this pandemic. Then there’s a three-quarters who haven’t been affected. In fact, many of them say, they’re actually better off.
One of the things I think we just have to be mindful of, is this pandemic is likely going to continue to increase inequality but there’s also a lot of consumers who haven’t been able to travel, who haven’t been able to spend on other discretionary things. As we talked about earlier, the home is now more important. They’re investing money in their homes. For REALTORS® for the sector, there’s real upside there that not only is the home more important than ever, but there’s a lot of people who have a lot of money saved up that at some point, they’re going to open up and spend it again. That’s I think, the hopeful side, hopefully looking to 2021.
Erin: Hopefully more donations to charity too when you talk about the two Canada’s, and the inequality and the people with the discretionary spending that’s just sitting there, maybe reaching out and giving out. That might be an optimistic outcome from all of these too, the money not spent on cruises, given instead to a worthwhile charity.
David: Yes. I’m hearing, anecdotally, at least, from a number of charities we work with that they are seeing an uptick now in giving. That I think people as they enter the holiday season are realizing that many of us, I’m one of them have been incredibly fortunate. Giving to a food bank, or to a health charity, or others, you name it, whatever cause is important to you, I think is something that we can do, because we can’t forget that. Think about one, out of four Canadians have lost their job, lost hours, have put themselves in harm’s way for us. I think there is a chance for us to give back.
Erin: David, what lessons from 2020 do you think are going to be most important as Canadians head into 2021? There are a lot of unforgettable things about the year that was. What should we take with us to lead the way into a new year?
David: Well, anyone who knows me knows that I’m a pretty much a glass half full kind of guy. I look at everything we’ve been put through. The learning for me is we as species, as people are incredibly resilient and incredibly creative. Not only are we likely to get a vaccine for this virus in record time, which in itself is an amazing feat of human ingenuity and science. If you look even at your local restaurateurs or retailers, many have gone out of business and have struggled, but others have also found new ways to make it and to figure out a way to serve their clients. I think we see it in retail. We see it in the real estate sector.
To me, it’s that resiliency of the human spirit, of the human ability that keeps me hopeful for 2021 and tells me that we’ve got other big challenges. Once we get through this pandemic, climate change, and other things but it’s at least given me hope that we can also tackle those challenges with optimism and ingenuity. To me, that’s the lesson. We are a resilient people and we will get through this.
Erin: How amazing has it been how exponentially everything has moved ahead? Talking about the vaccines as you have been, but the technology and the fact that now what we were doing in BC long before a lot of other provinces, getting virtual doctor’s appointments and taking some of the heat off the system in other ways has now become the norm. We have adapted and this adaptability as you say, this resilience really does bode well for the future, doesn’t it?
David: It does. I think we’ve also as much as the mental health challenges that this pandemic has created, it’s brought new focus to that. It’s I think, made us more self-aware of our weaknesses. In our research we do a lot of polling and focus groups, we’re seeing more and more people talking about looking to make their lives more simple. More appreciation for nature and the little things that matter in our lives. My sister had her second son last week and that’s such a joy. I think this whole episode has forced us to appreciate that. Also, to know that we can adapt and technology, I would say, imagine going through this 40, 50 years ago?
Imagine not having Zoom and high-speed internet and Netflix to get us through these days. I’m actually quite happy that I got to at least live through this pandemic today as opposed to 50 or 100 years ago because it’s not easy for everybody, but it’s certainly been easier because of that technology and what we have access to.
Erin: We’ve gotten your picture of how you feel about 2020. How do you see Canadians feeling about this year, David? Are we generally optimistic for the future?
David: Well, there’s no doubt that when you look at public attitudes, Canadians are well aware of what this pandemic has meant and how it’s disrupted their lives. There’s a silver lining that we see in the polling and the public attitudes that we’ve actually had an increase in the percentage of people who feel the country’s headed in the right direction. It seems counterintuitive to everything we’ve gone through. I think it’s a reflection of, as much as it’s been a challenging period, a lot of things that we might have taken for granted, I think big things like our political system, our public institutions, our health system, which has been under stress, generally has worked really well. People have been quite impressed.
Obviously, part of that is we’re always in comparison to the United States, which mostly means we’ll say seems chaotic, and a sideshow. I think general optimism that not only do we have it really good here in Canada, compared to others around the world, but that even when we’re through this challenging period, and we’ve got a vaccine, and we’re no longer worried about contracting this virus, that we are going to be stronger, and Canada will be the best place to live as a result. I see that optimism underlying all of the challenges and that I think, gives people hope for the future.
There’s no doubt that people are waiting for this vaccine and there’s an impatience there but one that I think will ultimately turn into optimism and that excitement to get back to doing all the things we love that we’d haven’t been able to do.
Erin: Well, as we raise your half-full glass to 2020, and 2021, David, do you have a– Uncle David, congratulations.
David: Thank you.
Erin: Do you have a New Year’s resolution?
David: I do and it’s more of a state of mind. I think I found myself over the particularly the last few months, always reverting to the negative, “Oh, I miss traveling or no winter vacation this year to a warm place.” I’m going to stop doing that. I think for 2021, I’m going to really try to focus on the positive things I’m looking forward to despite the restrictions that are in place as opposed to dwelling on what I can’t do. I think if I do that, I’m going to feel better. I also think it’s going to make people around me feel better, too. That’s my resolution for 2021.
Erin: I love that. Thank you. Thank you, David, for your time, for your optimism, for your observations and hopefully, we’ll talk again in the new year.
David: My pleasure and all the best and stay safe.
Erin: As you enjoy this special podcast today with a coffee or your favourite beverage, here’s another spot you’re going to want to save of CREA Cafe. It’s a cozy place for REALTORS® to connect and share thoughts and ideas on the latest industry happenings. With insightful new content created weekly, join the conversation at CREACafe.ca.
Joining our conversation now is Shaun Cathcart. Shaun’s a Senior Internal Economist with CREA and he’s here with us for this a year ending episode of REAL TIME for look ahead. First, Shaun takes a peek back at what housing across Canada looked like before COVID-19.
Shaun Cathcart: Well, that’s such an important place to start because it’s really hard to understand where we are now if you don’t understand where we were heading into this. It was only 10 months ago. When you do what we do for a living and look at this data going back 40 years, you can see these really long housing cycles and they aren’t really long. You can work an entire career doing this job and only see one of them but you really have to zoom out to see it. One big housing boom that we have in our database was 1984 to ’89, which I think a lot of people know about.
The next one wasn’t until 2002 to 2007 and then nothing safe for a few little flare-ups in Toronto, Vancouver until basically this March,
It was going to be another one of those years, and I think a lot of people didn’t see it coming. Pretty much the week we were going into that we went into lockdown. How do we get there? 2010 to 2015, we had a cyclical high for overall listings in Canada, that’s all of the homes for sale at any given point in time on every MLS system across the country. What happened around 2015? Well, the first thing was the oil price crash, which caused a lot of migration out of the oil patch, and to elsewhere in Canada.
You have a bit of a buildup in supply in the oil patch but you start to see places like Toronto or Vancouver, which we saw a rapid absorption of supply and really tight market conditions, which starts to affect prices. The bigger thing that happened was, that doesn’t get enough attention, in my view because it’s the biggest factor is a really big increase, a really big ramp-up in international immigration, which caused a major increase in population growth. Then under the surface of that population growth, even if that wasn’t happening, you’ve also got this really big cohort, arguably, maybe the biggest cohort in our society, known as the millennials. There’s a lot of them.
They all went from being in their late teens and 20s to being in their late 20s, and 30s, and now 40s. When you’ve got a ton of new Canadians coming on the scene, at the same time as a whole bunch of other people are going through that mechanical phase of life where household formation tends to happen in those years, you’ve got a lot of first-time homebuyers. First-time homebuyers absorb inventory, but they don’t put another unit of inventory back in the resale market, and so you get this big drawdown in the supply. Now, what happened was the government stepped in to try to cool that down at one point. There was the BC and Ontario governments, the federal government with a stress test.
That stalled things out, but it didn’t reverse the trend, it just stalled it out in 2017, ’18, right up until the spring of 2019. What happened was even that last spring was mediocre. Everyone has like, “The stress test.” Then everyone went on summer vacation, stopped paying attention, and right around that same time, sales started to go through the roof again. That trend resumed and supplies started dropping very quickly to the point that by this February, before COVID, supply across Canada was at a 13-year low. The number of months of inventory was about maybe 1/10th of 1% one decimal point away from being the tightest it had ever been.
While some people have said, “Well, what are the headwinds this year is there’s no immigration.” That’s been such a big driver, but in my view that immigration and millennial story have been building up behind a wall of short supply for so many years that that was ready to explode onto the scene this year. We locked down, but we opened up three months later, and guess what showed up on the scene, the same exact conditions that had taken years to build up beforehand.
Erin: Well, with the rebound are you explaining here why the housing market rebounded so quickly, Shaun, from that initial spring lockdown?
Shaun: Yes, that’s a big part of it, there’s more going on too. One of the reasons why the rebound was so surprising is because the numbers in April were basically the worst ever. That was mostly because nothing was going on for a while. It wasn’t that all the demand went away, it was just that no one was making deals at that point. You open things back up, and like I said, what shows up on the scene the same conditions that were there three months earlier. Now, clearly under the surface, what’s going on in 2020, in the housing market is different than what would have been going on in a non-COVID 2020.
You can’t really compare to that because it doesn’t exist. Why was the rebound so surprising? I think some of the headwinds initially were more obvious than the tailwinds. We’re in a major recession, we got major employment losses, uncertainty about the future, big declines in immigration, people can’t pay their rent, they can’t pay their mortgages, et cetera. The assumption initially was we’d see this big increase in supply and a big drop in demand. I think some of those assumptions were also coming from a place that was also assuming a neutral starting point for this year, the old Goldilocks market, not too hot, not too cold, when in fact, we were coming into 2020 screaming hot with our hair on fire.
Then, what about those tailwinds that didn’t get identified that are also very important? Well, COVID is a big shakeup to society and when you’ve got a big shakeup to society, the way that we live and work and commute and interact with our homes, a lot of people are going to pull up stakes and start moving. The million-strong overall housing stock, people that typically don’t move for years or decades are now all of a sudden moving around. That can cause a lot of activity in resale markets. On the supply side, you’ve also got a lot of people who may have been sellers in a normal year that said, “Are you out of your mind? I’m not going anywhere this year.”
On balance, we started off with very tight market conditions, and what’s happened is sales have gone up, even more, they haven’t gone down, and supply has gone down, even more, it hasn’t gone up.
Erin: Did any activity in any specific region stand out and surprise you in 2020, Shaun?
Shaun: If you look to Ontario, Quebec, the Maritimes, right now, they’ve got the tightest market conditions they’ve ever seen, but you know what they were before COVID? They were also the tightest market conditions they’ve ever seen. Yes, they’ve gotten even tighter so maybe that’s a bit of a surprise but it’s not all that different from the way things were. I think the bigger surprise would be places like Alberta, Saskatchewan, the oil patch that had really been laboring a little bit under a big overhang of supply, since around 2015, that hadn’t been causing prices to decline.
What’s happened with higher sales and lower supply everywhere, particularly there were there was a lot more excess supply to be pulled off the market and that’s what happened. I think in Alberta, over the last year, supply overall is down something like 20%. That’s a big decline in the stock variable of listings that have been hanging around for five years. Meanwhile, sales are on the verge of hitting a five-year high. What’s happened is, these places that were for five years, they’re known as the buyer’s markets of Canada, have suddenly gone right through that buyer’s market territory and now actually, right at the midpoint of balance, are the most balanced healthy markets in Canada, if you can believe that. We’re seeing prices from up there as well, whereas they had been falling for so many years.
Erin: What about property types?
Shaun: That was one of the predictions made early on that I think was one of the ones that it was hard to get wrong that at a time when we were working from home, working out from home, it was your kid’s school, you wanted to be away from other people and dense areas. You didn’t have to commute to downtown that the bigger detached homes further out would be the ones that people were really going after. That maybe the condo market with shared hallways and elevators and doorknobs and buttons would be maybe not as popular, and maybe the smaller property types, and you’re spending all your hours in your home, you might want to have a bit more space.
That’s definitely what we’re seeing, but again, it comes back to the same idea that you have to think about the starting point. All of these property types came into this year, red hot. Yes, the condo market is come off the boil, but it’s really only gone from red hot to a lukewarm bath. This is not a buyer’s market yet. In fact, we’re seeing lots of sales there because that’s one segment of the market that actually has listings that are for sale. Whereas the detached side of things, the prices just continue to accelerate because there are so few listings.
In fact, the sales numbers are actually starting to look underwhelming in the detached side of things because it’s starting to get reeled in by that lack of supply, even though the demand is obviously still there. I think this apartment story is probably going to see a reversal, give it a year or two. Once all these downtown areas and bars and restaurants and everything else are all open back up and we’re not so maybe nervous to be around other people when we’re all vaccinated, I could see that story reversing but for now that’s what we’re seeing this year.
Erin: Well, as we continue our look ahead now with interest rates remaining low into 2023 and low inventories in many markets, how do you see this playing out in 2021, Shaun?
Shaun: Well, the thing about interest rates or low-interest rates or medium interest rates or high-interest rates, is the thing that really affects housing markets as when they change and when they change quickly. When they shoot higher, that can really choke off the housing market, which had been adjusted to whatever level they were at before. They go down quickly it can really supercharge your market that had been adjusted to whatever they were before. I think interest rates are very low right now, but they’ve been low for a long time, and really the big story is they’re not expected to go anywhere.
I guess there’s positives that are supportive for the housing market that they’re low, but generally, they have a neutral effect if they don’t go anywhere for the next few years. That’s what the Bank of Canada is saying. What about the housing market in 2021 is a forecast? Well, the data that we’ve been publishing over the last four months has been the strongest ever, the tightest ever, and glancing obviously at the November numbers is looking equally strong. The new year is just a couple of weeks away at this point. These market conditions, like I said, they take years to develop, to have a drawdown in the overall supply of homes in Canada from 250,000 five years ago to just 140,000 now. That’s a huge decline in a very slow-moving metric. I don’t expect that these markets that we’re looking at right now is going to turn into a pumpkin on New Year’s Eve.
I think that a lot of 2021 could very well look the same as it looks now. Like you say if things don’t really change and the economy is improving and all of the rest of it, we ramped immigration back up, I see no reason why this is going away. We missed last spring’s market when we were in lockdown. It was arguably going to be one of the wildest springs that I’ve seen in my career. Then it didn’t happen. Spring 2021 is only about four months away and we’re going to see a big rush of listings come out strategically at that time because that’s a good time to sell. I think there’s going to be a lot of demand for those properties. We’ll see what happens.
Erin: What lessons from 2020 do you think are going to be most important for us to hold onto? There’s a lot of the year we want to forget, but what should we hold on to, Shaun, as we head into 2021?
Shaun: A vibrant housing market is one where you’ve got a lot of demand and a lot of supply, and people that want to move around can move around. Right now, we’ve got a massively imbalanced housing market. I think as important as population growth is for Canada’s future and that’s going to be a big component going forward with an aging population for our social programs, that all of that at the same time, those population gains need to be timed out with gains in the housing options for people to live in. For anyone that’s looked at a chart of Canadian population growth over the last four years or so knows what I’m talking about. It’s been off the charts.
We haven’t seen the residential construction across the housing continuum to keep up with all those people who need to live somewhere. We see record tightness in the resale market and very strong price growth, arguably too strong. The same competition for new homes that become available, tight rental markets, and rising rents, not obviously rate at the moment, but just in general. I’m sure that will come back and issues with availability of affordable housing as well. Wherever you are on that housing continuum, it’s been a challenge to get into housing. What you need when you have a rising population of more people is more roofs for more heads to live under, right?
The government is looking to put the country back to work, that’s one place where we need a lot of work done. An issue has been a shortage in skilled trades, obviously, but I guess if you look across the employment spectrum right now, you’ve got one big group of people who are unemployed over here, and a shortage of workers over there. It seems like maybe a good case for retraining or vocational training as part of our recovery from this going forward.
Erin: All right, now I happen to know that you’re not really a resolution guy, New Year’s resolution. I’m going to ask you to step outside your comfort zone a little bit, Shaun, we won’t hold you to it. If you had a New Year’s resolution for all of us or for yourself for 2021, what would you like to share?
Shaun: Sure. While you’re right. I’m not a resolution guy. I do not like New Year’s Day. It’s arguably my most disliked day of the year when we go from warm family memories and vacation and gatherings and parties to instantly minus 30 and go back to work.
Erin: Let me just ease your mind because there’s no vacations. There are very few gatherings.
Shaun: That’s true.
Erin: All that being said.
Shaun: There’s less of contrast this year. You’re right.
Erin: It always does feel like first day of school though. I agree with you 100% New Year’s Day.
Shaun: It does with a windchill. Fair enough. There’s less of a contrast this year. Then I’ll compromise and I’ll offer something.
Shaun: It’s not a resolution. It’s a thought about 2021 that had occurred. When you listen to health officials saying, talking about vaccines and rollout and safety and all that it’s coming, but it’s going to take a while. We might be in this situation we’re in not normal for some time yet, maybe most of 2021. The COVID years, there’s the old, normal from 2019 before, there’s the new normal that will be in someday, which may be similar to the old normal, maybe not. Then there’s this middle period that we’re in right now when we’re dealing with this virus. If it spans 2020 and 2021, then I think that marks a New Year’s Day of 2021 is the midpoint of that. It reminded me of an old riddle. I don’t know if this one, but have you heard, how long can you walk into a forest?
Erin: Yes, I think so. Go ahead. Tell us.
Shaun: It goes, how long can you walk into a forest? The answer is halfway because after that you’re walking out. I think that would be my thought for 2021 after a year that we’d all like to forget. It’s been full of uncertainty and anxiety that at least we can say that it looks like there’s a light at the end of the tunnel and that we’re moving in that direction. I think that after the year we’ve had that something.
Erin: We’re not out of the woods, but you’re helping us see the forest for the trees. Is that it?
Shaun: Keep walking.
Erin: Amen. Amen. Bundle up. I hear you’ve got a minus 30 windchill coming, Shaun, thanks for your time today. We really appreciate it. All the best to you in 2021.
Shaun: Thanks, Erin. Same to you and it was my pleasure.
Erin: We’re going to round out this look back, look ahead episode of REAL TIME with the man who literally has his finger on the pulse of what’s going on around and within Reality in Canada. We’ll be talking about REALTOR.ca because in 2020, even more people turn to it, including our episode seven guest, Sarah Richardson, who searches out properties for a living parade, for HGTV and her shows there. She absolutely loves it. Remember this?
Sarah Richardson: What I find so interesting about the app now is it gives you this giant map view and you can zoom it out to be as broad as you want, or you can zoom it in. If you know you need to be on a specific street or in a specific neighbourhood, it gives you all that flexibility. On the large scale, it can seem like there is a myriad of possibilities, which there is, but one of my favourite elements is the filters and the search tools.
Erin: Go back to episode seven, to hear a fantastic chat with HGTV, Sarah Richardson here on REAL TIME.
Ready to dive into real estate and technology, here’s VP of REALTOR.ca, Patrick Pichette. Hey, Patrick. Welcome. It’s good to be talking to you as we wrap up the year together and look ahead to 2021.
Patrick Pichette: Erin. Hi, very happy to be here. Hope you and your family are doing well.
Erin: We’re doing all right. We’re doing all right. Well, now that we’re well into the pandemic, have you seen a shift in the types of homes that people are looking for? What have you seen?
Patrick: That’s a great place to start, Erin. First off, it’s going to take a while to get some real hard numbers on the long-term impact of the pandemic, but REALTOR.ca does provide some early signals that people do want more space, right? They’re spending more time at home. Many of us are working remotely. We need that extra space. Some of the things we’re seeing with REALTOR.ca that point to that, first of all, since the start of the pandemic traffic overall, the REALTOR.ca is up about 35%. We’re getting record numbers and that increase in traffic is being led by searches for single-family homes.
On the flip side, we are seeing a 20% decrease in searches for condos, and we’re seeing an 11% decrease in multifamily units. The numbers are telling us that people are looking for more space.
Erin: Are they looking to accommodate external spaces into their homes now? The things that the outside world offered us, like offices, gyms, classrooms, even a bigger kitchen, so that you can get into your cooking and your inner chef as you’ve been doing, Patrick?
Patrick: Absolutely. Anecdotally, yes, people are doing that. They’re spending a lot of time in their homes, so that could lead them to, I need to add office space or I want to do more cooking now. I hate my kitchen. I need to do some renovation. It’s definitely had an impact across the board.
Erin: What about new build sales versus resale? What have you seen there?
Patrick: This one is really interesting. It’s important to note that the resale market is always quicker to adjust to any changing market condition. This makes sense because people can list their properties fairly quickly. In contrast, there’s a long pipeline to bring a new construction to market. This has meant that the resale market fell further in April and May, but bounced back more quickly that new constructions could. At the end of the day, Erin, both resale and new builds are both in situations of high demand and very tight supply. In fact, we’re seeing record lows when it comes to inventory of resell properties.
Erin: What about location? Are people looking outside of urban centers more? What are you seeing there, Patrick?
Patrick: We get this question often, Erin, and especially because we’re hearing the stories out of the US. People in masses are leaving cities like New York and Los Angeles. When it comes to Canada when we look at the REALTOR.ca search activity, we don’t see any significant changes in people looking within versus people looking outside of a large urban center. At the end of the day, traffic is up significantly on REALTOR.ca and it’s up across the board from urban to rural regions.
Erin: While we’re talking rural what about demand or sales for seasonal homes or cottages? What did you see this year, Patrick?
Patrick: There are lots of regions that are obviously further out from large city centers like Toronto and Vancouver. They’ve been performing very strongly. Regions that have strong seasonal and second home markets, for example, let’s take this Southern Georgian Bay area in Ontario, that kind of region has benefited the most from the pandemic. If we stick with that example, and if you were to look within a two-hour drive radius around Toronto, most areas have been quite strong for a number of years. We’ve all heard the saying drive until you qualify for a mortgage.
Now if we go back to pre-COVID, the one area within that radius that was somewhat, just somewhat underperforming had been cottage country. This is probably explained by the fact that a commute to get to Toronto just for a weekend is not very pleasant. Today in the wake of COVID, cottage country has gone crazy and it might be because people are looking to get away for longer than a weekend, and they can afford to do so because they can work remotely. All things considered, the commute doesn’t seem to be that big of a factor anymore.
Erin: There’s the discretionary spending that David mentioned. The money that people didn’t spend on things in 2020, that they can go, “Hey, you know what? We’ve got this money left over from the vacations or whatever that we didn’t take or do. Let’s put it toward something else.” That something else could be a seasonal property.
Erin: Patrick, who has been searching and buying and has that changed since 2019?
Patrick: The numbers on REALTOR.ca are pretty much up across the board from first-time home buyers to people looking to downsize, but I can highlight a couple interesting new trends. The proportion of 18-to-24-year-olds visiting REALTOR.ca has doubled. This younger demographic used to represent 5% of visitors. Now it’s 10%. This is actually good news, Erin, because this younger demographic wants to learn things like what is a specific neighbourhood like? Is it walkable? Is transit accessible? Is it vibrant or is it quiet? They’re curious about the real estate process. They have questions about affordability. What might they be able to afford in the future?
The fact that they’re conducting this research on a site that is called REALTOR.ca where the REALTOR® value proposition is very prominent, is a great thing for our members. We’re building brand affinity and trust with this younger demographic who will one day need the services of a trusted advisor.
Erin: That’s fantastic. What’s the other trend you wanted to highlight?
Patrick: This one is actually, unfortunately, is a negative one. It’s a drop in the interest in commercial real estate. Since COVID, we’ve seen a decrease of 14% in the number of visitors who are searching for commercial real estate, and this is likely caused by the fact that companies, big and small, are rethinking their work environments, and what kind of physical footprint that they will need. This is a trend that we’re monitoring very closely.
Erin: Starting out 2020 most of us hadn’t heard of the word Zoom, except maybe in a Mazda commercial, you know, zoom, zoom. What are some of the virtual tools that REALTORS® have adapted to use in the pandemic? What do you think is here to stay as we move into 2021?
Patrick: I think a lot of it is here to stay, Erin. If we look at our membership, there’s actually a segment of our membership that they’ve excelled during COVID, and it’s because they already had adopted a digital first business. As an example, they were using digital signature software, virtual tours, 3D tours to promote listings. Those today who have embraced a “Zoom culture” over the last few months have taken their business further down the digital path. For example, we’re seeing a heavy adoption of live stream open houses on REALTOR.ca. Using Zoom or Facebook Live or Instagram Live, for example, to conduct open houses.
Currently, 25% of all listings on REALTOR.ca includes some sort of digital content. An interactive floor plan, a 3D tour, a YouTube video. Before COVID only 15% of listings had this kind of content. That’s a pretty big jump. In real numbers we’re looking at an extra 50,000 videos and interactive content on the website. This is great news for consumers because they crave this kind of content. Erin, I realized that I’m throwing a lot of stats at you, but if there’s one number that hopefully, REALTORS® will retain it’s the fact that when a consumer is on a listing on REALTOR.ca and they watch a video or a 3D tour, they are 50% more likely to contact that REALTOR®, email that REALTOR® or give them a call. In other words, a consumer that’s more engaged, better informed is more likely to contact a REALTOR®.
Erin: I have to tip my hat to everybody who has embraced the on-camera technology. As I moved from radio and into television and doing stuff online and video, and all of that, I had time to do that. This has been such a steep learning curve and so many REALTORS® that I’ve seen just rocket like they’ve been hosting shows for years. It really is incredible that massively done so well that your REALTORS® have accomplished.
Patrick: Absolutely. Hey, REALTORS® by nature are self-starters. I’m not surprised that many of them have adapted so quickly.
Erin: Amazing. Now research is saying that by the end of this year, which is just a very short time away, we will have moved up the technology ladder by a decade. What are some of the positive online behaviors and trends, Patrick that you think have resulted because of the pandemic?
Patrick: I would completely agree with that. You could find examples in every industry. Just look at the restaurant industry, for example, and the uptake in food delivery services. Municipalities and how they’re using platforms like Zoom to consult with citizens. Practically everyone now is transferring money electronically and that was not the case pre-COVID. I think COVID has shown us that we as companies, but also as individuals, are able to change and pivot our business practices much quicker than we had anticipated. You pointed out a few examples of REALTORS® becoming radio hosts and using Zoom and different technologies.
I’ve talked about digital signatures, and we’re seeing REALTORS® use end-to-end transaction management systems where the whole process can be managed at a distance. There are so many great examples of the way that our REALTOR® members have quickly embraced virtual tours, live streaming platforms. They literally did this days after the shutdown in order to keep their businesses going.
Erin: All right. We like to look back and think, what did we learn in 2020? What lessons do you think, Patrick will be the most important as REALTORS® head into the new year?
Patrick: Well, Erin COVID doesn’t stop January 1st, and how REALTORS® adapt their business practices will be ongoing and well beyond COVID. I think that the key takeaway from a business standpoint, spend more time looking forward and not looking back. The fundamentals of client relationships have not changed. It’s still about quality service and knowledge of the market, professionalism, being a trusted advisor, but what is quickly changing are the tools. REALTORS® need to adjust to the current reality and that means focusing on technology, making the right investments, and developing a strategy for this digital age that’s been accelerated over the last few months.
Most of all, it’s about the realization that if you start using the technology that’s available to compliment all the great things that you were doing before COVID, both you and your clients will win.
Erin: Absolutely. On that winning note as you get the last word in the last podcast of 2020, Patrick. Not a lot of pressure but I want to ask you if you have a New Year’s resolution heading into the new year, either as yourself in your role or as REALTOR.ca have at it, the floor is yours.
Patrick: I didn’t realize this was the last podcast of 2020, time flies.
Erin: It sure does. 2020 has it dragged or flown for you?
Patrick: It has flown. Absolutely. You could do a whole other interview on this. Absolutely. It has flown. I think most people would say that. Yes, great job by the way. I really enjoyed all the podcasts throughout the year.
Erin: Thank you.
Patrick: I didn’t realize I was the last one. In terms of New Year’s resolution, for our members, I would say take the time to learn. I know some of this stuff can sound scary, but a lot of it is very intuitive and we’re just at the beginning. We’re talking about Zoom, digital signature and so on. We’re just at the beginning. This stuff is going to get a lot easier to use. Take the time, learn it. It’s going to be so much better for you and your clients because we’re not going back. The train has left the station and this is the new reality.
In terms of New Year’s resolution for me, I would say I’ve been doing a crazy amount of cooking. I’ve been trying all sorts of things, so I’d love to get a new kitchen but in terms of REALTOR.ca, if REALTOR.ca was a person, I think it would be like me. It wants to eat more and more different things. It wants to try new things. I don’t know if that analogy is making sense or not.
Erin: Well, sure. Throw all the spices in and see what tastes good.
Patrick: Yes, exactly. I would love to see REALTOR.ca just continue to have more of that digital content I talked about, more information for the consumer. Again, it comes back to a consumer that is better informed, better engaged, is more likely to become a future client for REALTORS®. Don’t be afraid to make the investment in digital content, and don’t be afraid to put as much information as you can about yourself and about your listings on REALTOR.ca.
Erin: Great advice. Patrick, thank you. Thank you and all the best to you in 2021.
Patrick: Same here, Erin. It was a lot of fun. Take care.
Erin: In our first podcast of the new year, we’re going to look into the most important factors as we make sure that our homes suit our needs. It promises to be enlightening, so don’t miss it. Be sure to subscribe, and thank you for being part of this year’s REAL TIME podcast.
REAL TIME is produced by Real Family Productions and Rob Whitehead, along with Alphabet® Creative. I’m your host Erin Davis. I just want to wish you a safe, happy, and healthy 2021. May you be as busy as you want to be, may you find joy and fulfillment in what you do and those who surround you, and let’s meet back here soon. Bye for now.