Real Estate

Locked: Coronavirus impact on Real Estate

  • Last Updated:
  • Oct 31st, 2020 11:26 pm
Deal Expert
User avatar
Oct 26, 2003
34482 posts
4035 upvotes
Winnipeg
Sparky9087 wrote: People are fleeing from high rises to suburbia. Living in a high rise is hell right now. Masks mandatory in all common areas. Want to go for a run? Wear a mask downstairs. Then carry it with you while it gets sweaty. Then put it back on when you get back.
Elevators are 2 people max. So if you live above the 12th floor during rush hour you can wait for 15 minutes while car after car goes by with two people in it and stops on every floor.
Everything just takes 5x longer
I think it is a good thing, for decades and centuries, people have been migrating into the big cities, results in huge congestion. Now there is finally a real push to de-centralize, and spread around people to settle in more land. The vast majority of the land on the planet is very sparsely populated, only the cities have huge concentration of people, lets spread out a bit and not stretch the city infrastructure to its limits. It is time for large urban center to get a break from all those people.
Deal Guru
Feb 29, 2008
12622 posts
7860 upvotes
ilim wrote: Joe the pipe is the example of one who sold condo early and missed on all the condos gains, waited as long as he could for the detached to go down, and bought one on the current highs.
Now he is spending all time posting here to help condos to go down, lol. Enjoy your new home if you have one now, why you are still jealous of those who did good money in condos. I don't understand the people who wish others harm even if it does not benefit them, well even those who benefit from it.
The lesson here is the one that we all heard before, don't time the market.
Just enjoy the show.
Sr. Member
Jun 19, 2017
564 posts
840 upvotes
JayLove06 wrote: We really don’t have any data on investors threshold for pain. If they’re anything like my friends, they can hold for a long time. Remember these are tiny mortgages even with low rent they aren’t breaking the bank. The few investors that are over leveraged will be in trouble. How many? I don’t think a lot. But as you say, the white collar job loss will be something to watch.

Tech sector is booming though. I imagine banking will see some losses. Hospitality was done a while ago but maybe we will see hotel brands close shop for food.

But then this affects all housing not just condos.
Some industries are booming, but it isn't universal, I work in tech as do many of my friends, the work from home services are booming but it's not universal. Some tech businesses are working off their backlog but no new business coming in to replace it, many companies are holding off on capital spending. Companies with international customers are struggling with their inability to travel. There is an economic wrecking ball that is swinging at us, we are in that period of lag before it hits, but just because it hasn't hit with it's full force yet the danger is still there. Signs seem to point to the fact that we are in for a tough slog, even if corona magically disappears tomorrow, it's going to be tough to change the momentum of that wrecking ball, it won't stop on a dime. We'll need time for businesses to bounce back, recoup some of their losses, and feel confident enough to issue new contracts and start rebuilding backlogs...that creates slack in the economy.

Hopefully my views are too anecdotal and myopic, but I think they probably do represent important portions of the economy to some degree.
Deal Fanatic
Oct 7, 2007
7613 posts
3684 upvotes
rodrickrod wrote: Life is fascinating. It seems to have movements or cycles as powers rise and fall. You can see it in the natural world and you can see it in human history. I think the West is currently falling. It's being torn apart by cancerous elements within, not defeated by an external enemy; it became too big and bloated and is falling apart on its own accord. This is a slow process that could possibly be stopped or reversed at some point. Otherwise, new powers will eventually emerge out of the ashes. They may be localized at first but they will likely end up monopolizing global resources once again, in a long enough time frame. They would of course use slavery and war to do that, unless new methods are invented. The next powers could already exist (eg. China, Russia, or elements of the West lurking in the shadows) or they could not yet be born. We can't predict the future, we're just along for the ride and to effect our small role in it!

Alternatively, the fall of the West could trigger the total destruction of mankind if things get very messy, in which case the cycle would continue with whatever organisms survive to continue to fight for resources in the post-human world. One thing we can say for certain is there's nothing "sustainable" about life; evolution is 3.5 billion years of ascension driven by constant change and that some humans wish to stop here and live happily ever after merely reveals something about their psychology.
A very PROFOUND comment, especially in light of what we are witnessing today.
Sr. Member
Jul 10, 2018
513 posts
483 upvotes
Things will eventually return to normal but there is no telling how long it may take. It looks like we may have a covid generation just like we had a polio generation in the early 20th century. I hope for a quick recovery but as it stands it looks like the fallout will be magnitudes larger than anything we've experienced in our lifetimes. I have no intention of selling for decades but I'm also prepared to wait more than 10 years to see a full economic recovery. If and when white collar jobs start shedding at high rates, real economic turmoil will begin. In times like this you hope for the best but plan for the worst. Anything less is foolhardy. Can you lower rents and still easily service debt? Can you go without a job for long stretches? Do you have significant funds available for opportunities that arise when most people are struggling merely to get by?

I think the work-from-home future is somewhat exaggerated and that the jobs that can be done from home may be more easily be off-shored for better ROI. I think large cities will continue to command a premium - infrastructure and serviced land are essential for most residents and can't simply be duplicated without significant time and investment. This pandemic is just a test of patience for those that have invested wisely (i.e. within their means).
Sr. Member
Jul 10, 2018
513 posts
483 upvotes
RolandCouch wrote: Absolutely it makes a difference to anyone who knows basic math. A tweet picks an outlier and then has to cut almost another $100 off to make their point? Talk to me when rents are down that low across the board.

We probably haven't bottomed but let's stop pretending that the few outliers who are desperate are reflective of all the owners who bought the condo for like 300K a decade ago.
One also has to look at the details... some hardcore bears are screencapping rooms for rent within a condo unit as the price for renting an entire condo unit.

Conversely, it's important to take note of desperate landlords and their rental pricing. Prices in real estate are set on the margins (i.e. enough "outliers" create that margin). However, if previous downturns are a guide, rents can and do decline but not significantly and not for very long. Still, our current environment may not be comparable to other economic downturns.
Deal Fanatic
Feb 22, 2011
7308 posts
7804 upvotes
Toronto
Gotta love corporations. I am starting back in the office on Wednesday. They announced it two weeks ago and said they would probably cancel reopen plans if cases got above 200. Today it is 425 and they are still moving ahead with back to office lol.
Deal Fanatic
Oct 7, 2007
7613 posts
3684 upvotes
mazerbeaner wrote: Gotta love corporations. I am starting back in the office on Wednesday. They announced it two weeks ago and said they would probably cancel reopen plans if cases got above 200. Today it is 425 and they are still moving ahead with back to office lol.
I am sensing a move "back to normal" all over the place regardless of reports of increased case counts all over the country.

Heck, here in BC, nightly shootings have resumed to levels that were in existence before the pandemic,

It is as if September is a time for returning to normal and, pandemic or not, society is striving to live our lives as normal as possible.
Deal Addict
Dec 12, 2009
4359 posts
2020 upvotes
Toronto
Sparky9087 wrote: The science in masks is settled. Cloth masks increase infections vs no masks. There is a big difference between surgical masks and the one made from a used pair of jorts. If you go to visit a nursing home they will swap out your home made mask with a surgical mask. Why do you think that is? Cloth masks achieve nothing but let you signal your virtue from a distance. Cloth masks have a 97% penetration rate.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4420971/
Gotta love it when people quote 1/2 a sentence to support a viewpoint. Here is the full line:
Penetration of cloth masks by particles was almost 97% and medical masks 44%.
Scroll down a bit further to the section that reads Strengths and limitations of this study and you will find:
The control arm was ‘standard practice’, which comprised mask use in a high proportion of participants. As such (without a no-mask control), the finding of a much higher rate of infection in the cloth mask arm could be interpreted as harm caused by cloth masks, efficacy of medical masks, or most likely a combination of both.
IOW, the authors recognized their study was flawed and that people might make the same interpretations that you did.

Read through the study and the participants only wore masks during their work shift. That would indicate they had the potential to come in contact with infectious agents outside of the workplace.
Social Distancing means staying apart 2 meters or 6 feet, the depth of a grave.
Get closer and you might have one foot in the grave. (Pass it on)
Deal Expert
User avatar
Apr 21, 2004
54082 posts
18994 upvotes
Good thing mortgage interest rates are not deductible here, unlike in the US where there could be a domino effect, likely not as bad as subprime of course. American r/e investors, some of which don't have a lot of positive cash flow during this pandemic, are looking mighty aggressive in hindsight.

https://www.marketwatch.com/story/the-c ... =home-page
Deal Fanatic
Feb 22, 2011
7308 posts
7804 upvotes
Toronto
alanbrenton wrote: Good thing mortgage interest rates are not deductible here, unlike in the US where there could be a domino effect, likely not as bad as subprime of course. American r/e investors, some of which don't have a lot of positive cash flow during this pandemic, are looking mighty aggressive in hindsight.

https://www.marketwatch.com/story/the-c ... =home-page
That doesn't make any sense. If an expense that is deductible goes down it is still a massive benefit as by definition you only reclaim a portion through deducting it on your taxes.
Deal Expert
User avatar
Apr 21, 2004
54082 posts
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mazerbeaner wrote: That doesn't make any sense. If an expense that is deductible goes down it is still a massive benefit as by definition you only reclaim a portion through deducting it on your taxes.
It makes a lot of sense. Maybe you missed my point. If mortgage interest costs were deductible against income in Canada, do you not expect a lot more investors / landlords to be over-leveraged? That is exactly what is happening in the US.

If mortgage interest cost go down and borrowing power increases, some people will double, triple, quadruple down and buy more properties in the US.

Tax rules do shape a lot of behaviors.
Newbie
Sep 14, 2020
78 posts
72 upvotes
Edmonton, AB
ROYinTO wrote: Scroll down a bit further to the section that reads Strengths and limitations of this study and you will find:

IOW, the authors recognized their study was flawed and that people might make the same interpretations that you did.
Wrong. "Limitation" does not equal "flaw". All studies have limitations.
ROYinTO wrote: Read through the study and the participants only wore masks during their work shift. That would indicate they had the potential to come in contact with infectious agents outside of the workplace.
That is irrelevant. There is no reason to suspect that the people who were randomly assigned to wear cloth masks would be more likely to contact infectious agents outside the workplace than the people who were randomly assigned to wear medical masks.
Deal Expert
User avatar
Apr 21, 2004
54082 posts
18994 upvotes
flexgrip wrote: Hmmm...the tagline of the article: "Sooner or later, homeowners in this frothy U.S. housing market must pay the piper."

If US average prices are considered frothy with prices at the same level as 2007, in what state is the Canadian Real Estate market?

Image
Depends how leveraged a typical American r/e investor is versus a Canadian r/e investor.

Also, how much to bail out Canadians versus Americans. Go JT go!

You compare Canadian r/e to US because it's expensive but you fail to account the sources of immigration where r/e is even a lot more expensive in major cities and out of reach to the upper middle class.

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