So, how was everybody’s holiday weekend?
Tuesday marks four weeks since the Ontario government enacted their first in a series of “shutdowns,” and if we had to pick some sort of “day zero,” it would be Tuesday, March 17th.
Four weeks has both flown by, and taken forever, if that makes any sense.
On the one hand, when I think back to four weeks ago, it seems like just yesterday. I feel this odd sense of pride, for those of us looking to “wait out” the pandemic and return to normal life, that we’ve successfully made it through four weeks. On the other hand, I think about what my average day looks like, what I’ve lost, and what people around the world are going through on a daily basis, and the last four weeks have taken forever.
One of the emotions I would have never expected to feel during this pandemic is guilt. Every time I find myself complaining about a pandemic-related situation, experience, loss, or annoyance, I then think of those that have lost their lives, and those who aren’t as fortunate as me, or those that I know. Then I feel guilty. It’s tough to not really be able to think about or express those feelings of loss and frustration without feeling guilty, and thus that you can’t have those expressions.
At times, I have to pinch myself and say, “This happened. This really happened.”
Every morning when I wake up, it takes a few moments to remember, “Oh yeah, we’re all living in isolation and the world will never be the same.”
I have to continuously remind myself that this is not a Will Smith movie, or a Netflix show.
Even as I write this, I’m still thinking, “What the fuck? Really? Is this really happening?”
I still can’t believe it. I don’t think anybody can.
This past weekend was when the pandemic became all the more real. I celebrate both Passover and Easter with my family, because, as you know, I just love religion so much…
I haven’t seen my wife’s family in months, and losing the opportunity to connect with them at Passover was a huge loss. The dinner is always an absolute riot; the very definition of “gut-bursting laughter,” you know the type that makes your abs sore the next day? I miss that. It’s been way too long, and Passover is the event that none of us every miss, and it’s a guarantee to get to see the entire family, and joke like we’re teenagers again.
I haven’t seen my dad’s side of the family since just after my son was born, in the first week of February. Easter is always a much-needed reconnect during a time in the spring when we’re all so busy. I’m the turkey-carver in the Fleming family, something I take great pride in! Self-taught, but I know every single bone and piece of meat in that bird, I assure you. I’ll go up against anybody. Once this pandemic is through, invite me over, I’ll show you. Missing out on Easter and seeing my daughter with her two cousins at the kiddie-table is a huge loss at a time when it would have meant more than ever.
And you know what else?
The world is out of puzzles.
Since this all started, I’ve completed five Ravensburger 1000’s. I’m a puzzle-snob, so I refuse to do any puzzles less than 1,000 pieces, and I only do Ravensburger. Yes, I’m insane.
Try buying a puzzle on Amazon right now, they’re up about 300% in price.
Ravensburger’s has stopped selling puzzles online. Think about that for a moment. That’s like if McDonald’s stopped selling hamburgers.
Amazon, Chapters/Indigo, Mastermind, Scholar’s Choice, Toys R Us. I’ve tried them all.
And I’ve had enough of Zoom calls. I think we all have. Most of them are unproductive anyways. Half the people on the calls aren’t listening, and many are on the calls simply to convince themselves they have a purpose in life.
I’ve raked my lawn so many times, I don’t have a single leaf out of place. If there was one, and I mean one, I would run outside right now and pick it up.
So far, I’ve only gained about three pounds. But we all know there’s more on the way. It’s tough not to grab a cracker every time you walk through the kitchen, or a handful of Cheerios when your kid is eating. Will power only gets you so far.
The only good thing coming out of the last four weeks? I’ve spent more time with my kids than ever before. My son is a little over 2-months-old, so there’s only so many ways in which we can interact. But my daughter and I have a whole new level of love, trust, and experience. Honestly, I would rather be selling houses on a Wednesday afternoon than walking through the ravine with Maya, looking for the perfect walking stick. But if I had to do something other than sell houses, this would be it. No question about it.
I have a feeling that everybody reading this could tell similar tales, share similar feelings, and find the words to property explain the last four weeks of their lives. It’s the one thing that each and every one of us have in common.
For the last sixteen years, I’ve moved at a very, very fast pace. Even when my business is slow, I refuse to let up. When I’m away from work, I’m not really away. My vacations are all merely a vacation from the schedule I keep at home, but not actually a vacation from work. Suffice it to say, the last four weeks have been difficult for me, at the very most basic reason, because I truly am a fish out of water.
I’ve been thinking a lot about what the Toronto real estate market will look like when, as we keep saying, “this is all over.”
We can debate what “over” actually means, another time.
For now, I wanted to give you an idea of what’s on my mind, and what I’m discussing with my team and some of my industry colleagues on a daily basis. Having team meetings during the pandemic is unsurprising, but what really does surprise me is how many agents from other brokerages are calling or texting to chat, or catch up. Nobody is listing, and nobody is selling. We’re all asking, “What are you up to? What do you think? What’s your plan?” and the like.
The following questions, which as you’ll notice, flow in a way that each subsequent question almost provides an answer to the first, represent the questions that are collectively on our minds.
–
1) When will things be back to normal, and what will that look like?
We can ask this, generally-speaking, about the city, province, country, and the world. But as I said above, what’s meant by the pandemic being “over,” and what normal actually means, are two never-ending debates.
What does “normal” mean for real estate? Truth be told: it means something completely abnormal.
Our own version of “normal” will mean buyers buying, sellers selling, properties being listed, agents doing showings, and a host of other facets of our jobs that we’re currently not doing now. Don’t get me wrong, there are new listings, in a market where listings are down about 90%. But only a handful of agents are listing properties if they don’t have to. Nobody out there is knocking on doors, telling owners, “It’s a great time to sell.”
So when we’re finally back to listing properties, what will normal mean?
Normal will mean different. At the very least, different from what we’re accustomed to.
In that sense, given that things have been fairly steady and consistent over the last two decades, save for a 4-month period in each of 2008 and 2017, the new normal will be abnormal.
The rest of the questions on this list explain, collectively, what abnormal feels like.
As for the when, given that the Ford government is set to extend the state of emergency by another 28 days on Tuesday, I think it will be the end of May, at the earliest, before the market is back up and running again.
–
2) When will buyers be back at full-speed?
This is an interesting question, since the “chicken and the egg” argument comes into play.
Buyers won’t be back at full speed until they have listings to look at. But sellers aren’t going to list until the buyers are out.
Which comes first? I think that’s all relative.
Buyers will be back once restrictions have been lifted, social-distancing is present, but not to the point of lining up outside of grocery stores. Buyers will be back when they feel confident again, whether that’s in their confidence to keep their job, their confidence in the economy, or their confidence in opening the door at Tim Horton’s without a glove. This is different for everybody.
Buyers will be back as soon as the market is back. This is real estate. People will always be moving, and will always be buying and selling homes, no matter the market, no matter the economy. But back at full-speed? This is going to mean the fall of 2020, unless, best-case, June/July/August replaces our spring market, which is not out of the realm of possibilities.
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3) When will sellers feel comfortable listing?
As the theme of these ten questions go, the sellers will feel comfortable listing when the above question is answered, and buyers are back at full-speed.
But unlike previous times when the sellers are relying on the buyers, there’s more at stake here.
Currently, many listings on MLS, if not most, are not allowing in-person showings. As I’ve written before, some agents could care less about COVID and are truly turning a blind eye, but that’s maybe 1% of agents, and the few listings that sprinkle onto MLS do not represent the top quarter of agents. Most agents aren’t listing, and most of those that do are listing without in-person showings.
Many sellers, rightfully-so, do not want to list while social-distancing, self-isolation, and quarantining are all part of our daily routines. As a result, many sellers won’t feel comfortable listing until the state of emergency has been lifted, and until it’s no longer uncouth to advertise in a listing, “Showings in person, any time!”
There are condominiums in the downtown core right now that are not allowing real estate showings, and that has to change too, in order for sellers to feel comfortable.
Sellers are no longer only looking at buyer activity as a metric of when to list. Going forward, the comfort level will rely more on the market feeling normal again.
–
4) Will sellers accept current market conditions?
If you list your house or condo for sale today, you are not going to sell for the same price as you would have, had you listed in the first week of February.
Full stop.
You know this. You, the reader. You, the rational, objective individual with no personal stake in this.
But the sellers out there? The ones that feel hard-done-by? The ones that feel cheated? The ones that say, “This is so unfair?” Many of those sellers are not going to accept reality. Not for a while, anyways.
There’s a listing on the east side right now which makes me laugh.
The property came up for sale in the fall of 2019 with a “list low, hold-back offer” strategy. They didn’t sell, and in January, it was re-listed with another agent. Once again, they tried the list-low strategy, and while they got offers, they didn’t choose to sell. Instead, they raised the price, and re-listed.
This didn’t work, so now, during a pandemic, they are listed for a fourth time, once again, with the list-low, hold-back offers strategy. Except this time, third time they are using the same strategy, they are doing so after the market has dropped significantly.
So what makes me laugh? Since you’ve heard this story from me a dozen times, what’s different?
Well, the listing agent, upon a buyer agent booking a showing, is emailing a PDF package of “comparable sales,” including nothing but properties from December, January, and February.
“Me think thou doth protest too much.”
These are the type of sellers that are incapable of admitting they made a mistake. They will deny, deny, deny, and eventually, convince themselves of the existence of some alternative universe where they either don’t close on the house they bought (if that’s the case) or don’t move, take that job, downsize, etc.
This will not represent the norm when we are back up and running again, but there will be these folks out there.
–
5) What will prices look like?
Down.
To the seller in the story above, stop denying. Stop with your agent’s pathetic, see-through, counterproductive tactics. That will backfire. Accept that prices are down, and move forward, not back.
Something about deaf ears?
There are agents out there still suggesting the market is exactly where it was in late-February. While I don’t agree, I will say that we don’t have nearly enough data to draw any accurate comparisons. But my reasoning for why prices will be down is simple: they have to be.
Just as I will tout the basics of supply and demand when the market is hot, and I’m suggesting that prices have to go up, I will also suggest that, in a pandemic, with nobody buying, those properties that do sell, will sell for less.
And when we are back to the new normal/abnormal again, in late-May, June, or July, prices will not be what they were in February. I do believe they will recover, but they will be down when the market is back up and running, no question.
To explain this further simply takes away from the simplicity of the stated fact.
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6) How will property viewings take place?
How many enterprising individuals thought about building a better mousetrap in the form of virtual tours or virtual open houses, once this pandemic started?
I’ve received a dozen emails to this effect in the last month, although most of these wares being flogged are the same-old, same-old.
As things stand right now, most showings are virtual, at least to start. In-person showings on many properties are only being done after an offer has been made.
When things are back up and running, and showings are being permitted, then buyers will go on viewings. Easy-peasey.
But how many buyers go on viewings will differ, and that’s because buyers will no longer “tour.”
I haven’t “toured” buyers in years.
Today, I’m looking for one property for a buyer, and when that property comes out – in a week, or in three months, I jump on it.
The less-knowledgeable agents, or the “sell-anything” agents as I call them, will book viewings on nine condos on a Saturday, and take the buyer around until they pick one. These nine properties are often nothing like each other, which isn’t by design, mind you. Why would a buyer look a condo at 230 King Street East, then one in Mimico? You might say that it’s because they want to compare value, but I’m suggesting that this is usually done well in advance. A good buyer agent qualifies the buyer, and knows what that buyer wants. That is the value of a buyer agent.
When things are back up and running again, buyers won’t want to go look at nine condos. They’ll want to see one that is perfect (which is the way it should be, as I’ve noted…), and as a result, they’ll view more virtual tours online before heading out.
This means that each property will have fewer viewings, and if there are fewer viewings, then how will properties be priced?
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7) Will pricing strategies change as a result of a change in access?
Oh, I think so!
If I’m listing a 2-bed, 2-bath condo in King West in June, one that I would have listed at $799,900 with a holdback on offers, looking to get $950,000 for in February, I would now be listing at $934,900 with “offers any time.”
Maybe I get $934,900. Or maybe the response isn’t great, but that price acts as a negotiating cushion in the event that a buyer wants to bargain. If I can get $925,000 for that condo, I’m golden. That’s a 2.6% drop, aka, a rounding error.
Check my math, or pulse of the market, another time.
My point is that under-listing, holding back offers is not going to be automatic anymore, and personally, I wouldn’t recommend it to a seller.
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8) How many Realtors will leave the business?
A lot, I hope!
I believe that TRREB and OREA will defer the payment of fees, which they shouldn’t. If paying a thousand bucks is something an agent can’t do, then that agent shouldn’t be in the business for the simple reason that the agent needs money. The agent needs to sell that house, or close that buyer, and his or her interests then comes before the client.
This, of course, has been the case for many years. But only now is it painfully obvious, and only now can we see the evidence of such when an agent is going to go broke if they have to pay their fees.
A colleague told me yesterday that in 1989, the number of licensed agents went from 26,000 to 13,000. That was an economic downturn, and this is a pandemic – not an economic event. Any change in the economy would be the result of a pandemic, so I see a difference. Nonetheless, I see agents not selling real estate, and that means agents having to get other jobs.
I can’t possibly explain how much better off the industry will be in two years. Losing 15,000 – 20,000 of the worst agents, expanding education, and making the process of obtaining a license a more thorough and time-consuming process is going to make the agent pool better, and buyers and sellers will be the prime beneficiaries.
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9) How many brokerages will go under?
A lot.
This is sad, however.
Brokerages have full-time employees, and these employees will be laid off. Agents can go join another brokerage tomorrow, but support staff have to job-hunt.
We’re now into a full month of most brokerages taking in little to no revenue, while maintaining fixed costs. Physical space and staff are the #1 and #2 costs on every brokerage’s list, and if this goes on for another two months, a lot of brokerages will no longer be able to operate.
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10) How will the mortgage market change?
Let’s see…
The Bank of Canada cut the overnight lending rate, and the Big 5 banks raised mortgage rates.
The Big 5 banks began to offer mortgage deferrals, but now we see that some are charging interest on the interest.
Am I the only one who has no idea how banks will be operating in a few months’ time?
Perhaps a topic for another day, and one that a colleague of mine can help out with…
Ed
at 8:12 am
Another question for the GTA market. Seeing that so many people are working from home because of company policy, how many of those companies are going to provide working from home as an option going forward?
If commute time is no longer a factor in deciding where to live how many will then consider moving out of Toronto to the suburbs or even out of the GTA?
Chris
at 8:49 am
Hopefully many.
Long daily commutes from the suburbs to the city bring a host of issues. Congestion, pollution, stress and health impacts, wasted time and lost productivity, etc.
I don’t see much of a downside to more people working from home. If that eases demand on GTA real estate, all the better.
Natrx
at 11:36 am
As long as this virus is out there, I’m sure WFH will be a permanent fixture for many companies. Even that cut-throat manager will be hesitant to be continually exposed to the amount of people as before, which just compounds risk exposure.
Any work environment in an enclosed space, you see whole teams, floors, getting infected. Just look at Toronto Public Health and their outbreak, or all these processing plants still open. I sure as heck will be pushing WFH when things are ‘lifted. There will likely be rotating, or partial work days (i.e. 2 days a week, with different groups rotating)
Ed
at 2:59 pm
Along these same lines how many people living in a 350 sq ft condo have the desire to work from home.
Chris
at 3:08 pm
Probably not many; but then, how many of them would continue to live in a downtown Toronto 350 sq. ft. condo if they could work from home?
Certainly some will, as they value being right in the core for social events, restaurants, entertainment, etc.
But others will likely move out of these micro-condos, if they now no longer have to go into a downtown Toronto office on a daily basis. Perhaps further out along the subway line, perhaps to the suburbs, perhaps to other farther flung municipalities.
Kyle
at 10:09 am
Ed, i think this is a really great question. I used to think that as the office world moved to more remote working that people would be less inclined to live in the City, but i think the choices and the impacts are going to be far more nuanced. A lot of people who have been fully working from home these last weeks, miss the office for a variety of reasons. Whether that is creating a separation between work and home life, the social aspect, the routine, the lunches with coworkers, the career opportunities of being in sight, the networking, etc. I think when we get back to normal, people are going to prefer some percentage of wfh, rather than going fully remote. Also in many industries there is an ecosystem and network that has evolved in the City that would be difficult to replicate virtually. And there likely will still be a need/desire for in-person meetings. and workshops.
When we get back to more normal times and companies start offering more flexibility, I’m guessing there will definitely be a reshuffling of where people live, but i’m not as certain that means prices in Toronto will go down. In fact if traffic becomes lighter and gas prices remain low due to less commuting, i could see suburban homes becoming more popular. The other thing i could see is people opting to have multiple properties, a small pied a terre or rental in the City and a place outside of the City.
Jennifer
at 12:47 pm
a lot already started/encouraged this in the last few years as it means less costs to the company (one less desk/office space).
the downsides of working from home are many. starting with the loss of social aspects of an office and cabin fever. at the end of the day, are we simply people behind computers or is it good to interact with other people. it’s good to get out.
Ed
at 1:55 pm
I don’t disagree with anything that you said but cabin fever will surely be alleviated once people can go back out to restaurants, bars and meet with friends.
Pragma
at 12:49 pm
And there’s a secondary effect. All those companies downtown may think, “hey, we don’t need all this office space, WFH is working out ok”. They might cut their office space by half. The excess office space might be converted to residential and and help alleviate the supply side of recent GTA tightness.
Chris
at 8:45 am
“Don’t get me wrong, there are new listings, in a market where listings are down about 90%.”
Doesn’t seem to be quite 90%. John Pasalis posted his weekly update yesterday. Sales down 73%, new listings down 64%, MOI up to 2.2.
https://twitter.com/johnpasalis/status/1249773944015671296?s=21
Natrx
at 11:38 am
That spread is widening. It was more lockstep in the last 2 weeks of March. The rest of April will be very very telling. I’m guessing that spread will continue to widen.
Chris
at 11:55 am
Yep, the drop in sales and new listings was almost identical in previous weeks. Starting to diverge now.
HouseSigma reporting April 2020 GTA Active Listings of 10,933 so far, compared to April 2019 of 17,325; a decline of 37%.
Wilf
at 9:17 pm
@Chris
Please keep posting links to John Pasalis’s regular Monday updates. As an elderly gentleman, I find it too difficult and time-consuming to negotiate my way around the Twitterverse searching for what I want amid the flood of one- and two-sentence tweets. Heck, I still love to read (online) newspaper opinion columnists.
Thanks again, Chris.
Chris
at 10:16 pm
Hey Wilf, sure thing, I’ll keep posting Pasalis’ updates. Glad you find it helpful! Twitter can be a bit of a mess to dig through, but there is some interesting content to be found.
Verbal Kint
at 9:19 am
Two-part Q:
What Will Smith movie do you think David pictures himself in?
What Will Smith movie do YOU picture David in?
No cash prizes. Bragging rights only.
Derek
at 10:10 am
Ummm…. the guy with the movie handle says what now?
Daniel
at 9:27 am
David you’re sounding a bit more pessimistic this week. Is this the case, or am I reading too much into today’s blog?
David Fleming
at 11:03 am
@ Daniel
That wasn’t the intent, I wouldn’t say I’m more pessimistic. I would say I’m more realistic.
I don’t think anybody knew where COVID was going to take us, myself included. I think back to January (I wrote about this in my blog last month) when I was dealing with a seller who was in China and unable to sign a mutual release. The seller’s agent told me, “The seller needs a printer/scanner and that’s at his office. Everybody is in their homes, nobody is allowed to leave, offices are closed and cars aren’t allowed on the roads,” and I thought that was total bullshit. I thought he was trying to stall, or give a reason why we coudln’t get the document signed.
Now almost three months later, I feel stupid.
Could any of us have seen this coming? A worldwide pandemic that hasn’t happened in a century? A shutdown of society that has never happened?
I honestly think that had this pandemic not taken place, the Toronto real estate market would have continued its ascent well into next year and beyond. Now here we are, talking about not if prices will drop, but rather by how much.
There’s no denying that every single person and every single industry and business is affected, and real estate is no different. I’m trying to wrap my head around the new reality, and while we will return to normal eventually, and there will be a time in the not-so-distant future that listings are plentiful and showings take place with zero restrictions, it won’t be the same as it was in February.
That is my realistic take. Not pessimistic, but just objective and honest.
Natrx
at 11:43 am
Tech heavy Start-up companies which have driven rents might be in bigger trouble than you think as Venture Capital funds and Private Equity is pulled back significantly. Most of those companies serve a growth market (negatively impacted), and also cash flow negative, relying on rounds of funding to get them through to continued growth.
Travel restrictions will be lifted a lot later than local restrictions. China, which internally ‘solved’ it, is seeing new spikes due to people coming in, thus resulting in more travel shutdowns. That’s the future right there. This will hamper the condo market further with Airbnd impacted. Condo markets have been fueling the move-up buyers too. So that ‘normal’ might be further off, as in notably beyond 2020.
Chris
at 11:50 am
Related to your first point, Natrx:
“SoftBank Expects Nearly $17 Billion Loss on Tech-Focused Vision Fund”
https://www.wsj.com/articles/softbank-expects-nearly-17-billion-loss-on-tech-focused-vision-fund-11586781142
Additionally, international travel will almost certainly be one of the last things to be loosened up. Tourism and hospitality will take a big hit, but governments will likely be loath to put their citizens at continued risk from visitors, for the benefit of those industries.
Chris
at 11:28 am
An update from the IMF:
“In its World Economic Outlook published Tuesday, the IMF said it now expects Canada’s gross domestic product to contract 6.2 per cent this year.
“It is very likely that this year the global economy will experience its worst recession since the Great Depression surpassing that seen during the global financial crisis a decade ago,” the IMF wrote in its report.”
https://www.bnnbloomberg.ca/imf-slashes-2020-growth-forecasts-as-virus-fallout-mounts-1.1421246
J G
at 12:02 pm
Thank you for the realistic perspective David. Hopefully other bulls will share the same realistic view as well.
And who knows, if prices go down far enough, I might buy another investment property 🙂
Bal
at 12:21 pm
:)….and I might be able to buy the house…..
Jennifer
at 12:49 pm
Real estate agents may be sticking around since they now have the $2000 emergency benefit at their disposal. This is probably a win for them! That didnt exist last downturn you mention.
Appraiser
at 12:57 pm
“Multiple offers. Bidding wars. All-cash deals hours after listings go live: Welcome to Seattle, the city that four weeks ago was considered an epicenter of the coronavirus pandemic.”
https://pbs.twimg.com/card_img/1249759727824842753/mGxXmRLP?format=jpg&name=small
Appraiser
at 12:58 pm
Oops correct link:
https://www.wsj.com/articles/despite-stay-at-home-order-seattles-real-estate-market-continues-to-show-up-11586800867?mod=e2tw
J G
at 1:27 pm
Lol, ok
Chris
at 2:54 pm
Seattle?
I can only imagine the type of response that posting anecdotes from the American Pacific Northwest would have elicited from you, appraiser, had I toted them out a few months ago in an attempt to counter the narrative of Toronto’s market climbing.
Derek
at 3:52 pm
Regardless of any inference we are invited to draw from it (I can’t read the full article), if there is a City returning to normalcy, it’s good news!!
HVAC Mike
at 4:26 pm
I bought a larger house just not far from me (Burlington) so now trying to figure out to carry both mortgages and then put my current one up for sale or just go ahead with it start of May?
Will need to watch numbers as weeks go at this point.
Chris
at 4:29 pm
Somehow I don’t think appraiser was able to access the entire article either, hence why he only shared the opening paragraph, and not some of these other, more illustrative ones:
“Washington was the first state to report a novel coronavirus death. While the number of Covid-19 cases in the state continues to grow, the rate is slower than other states thanks in part to early restrictions. But what also distinguishes Seattle from many other major cities is its fast-growing tech sector. While many industries are struggling, some of the city’s tech companies are getting a boost as millions of Americans comply with social distancing orders throughout the country.
Amazon has announced it plans to hire 100,000 new workers in the U.S. to deal with the crisis, while cloud-computing providers like Google and Microsoft, another Seattle-area giant, have experienced increased demand from workplace-collaboration software providers, streaming video service companies and online videogame makers.”
Almost every person they profile works for Amazon or Microsoft. The article really paints Seattle as an exceptional case thanks to these tech giants headquartered there, as opposed to what other cities can expect.
Appraiser
at 6:35 pm
“Toronto now ranked one of top three cities in North America for tech talent.”
https://www.thestar.com/business/technology/2019/07/16/toronto-now-ranked-one-of-top-three-tech-cities-in-north-america.html
Chris
at 7:13 pm
Oh, did you read that CBRE report as well, appraiser? Then you obviously remember the salary graph, right?
https://images.dailyhive.com/20190729142412/vancouver-tech-talent-salaries-2019-cbre.jpg
And “tech” isn’t some homogenous sector.
Big players like Amazon and Microsoft, headquartered in Seattle, are doing well. So is Shopify, headquartered in Ottawa.
Others, like AirBnB, and small to medium sized tech companies are not faring as well.
Try as you might, the reality is Toronto is not Seattle. An overarching point of that WSJ article was the uniqueness of Seattle as a result of headquartering two of the biggest tech companies in the world, who are each thriving during Covid-19. You would know that, had you read beyond the first paragraph.
jeanmarc
at 9:13 pm
If you look at the stock market, the big players who’s stock has not dropped as dramatic are (mostly FAANG stocks)
Amazon (reached all time 52 week high today)
Microsoft
Tesla
Apple (coming back from a drop 3 weeks ago)
These companies are well liked by hedge funds and constantly manipulated UP. Otherwise, the rest of companies listed are all getting hammered and down significantly (oil, travel, airline, financial, etc.). It’s these companies that employ a significant number of employees that are suffering. Don’t forget all restaurants and mid to small businesses that are all shutdown.
It will be interesting for those who have those $500K+ mortgages and lost their job.
“And “tech” isn’t some homogenous sector.
Big players like Amazon and Microsoft, headquartered in Seattle, are doing well. So is Shopify, headquartered in Ottawa.”
Chris
at 10:27 pm
Yep, there is a small handful of tech titans that are doing well. Many others, much less so. The Economist wrote about this a couple weeks ago:
“Just as the big firms are standing even taller, many of the tech industry’s younger, smaller firms are being crushed in the worst slump since the dotcom crash 20 years ago.” – Big tech’s covid-19 opportunity, The Economist, April 4, 2020
To your second point, Jeanmarc:
“It will be interesting for those who have those $500K+ mortgages and lost their job.”
There are likely to be many of them. From CBC yesterday:
“Nearly 6 million people have applied for COVID-19 emergency benefits”
https://www.cbc.ca/news/politics/covid19-benefits-cerb-1.5530722
That’s 16% of our entire population.
Appraiser
at 8:21 am
“People are still searching for real estate in Toronto, and activity hasn’t dropped as much as it has in Canada overall per Local Logic data.”
https://twitter.com/benmyers29/status/1250155504317468674/photo/1
Chris
at 9:15 am
As measured by daily online users of real estate portals.
So basically, during this lock down, seems that the number of people surfing to trreb.ca has held up better than say rebgv.ca for example.
Yet, actual sales volumes are down 73% in the GTA.
Meanwhile, Google searches in Canada for “real estate crash” are at their highest level ever, since records began in 2004. Which is about as robust a prognosticator as counting the number of bored socially isolating people browsing TRREB.
Appraiser
at 8:34 am
“Falling Back to Earth: Fixed mortgage rates are at multi-week lows. In the last week, multiple big lenders have cut 5 to 15+ bps…
…Stocks Think the Worst is Over: The stock market is one of the better predictors of the economy. It’s notable then that since the 1930s, among all bear markets where stocks rallied 50% from the lows (like we’ve seen this month), in not one case did the U.S. stock market retest its lows (Source: CNBC).”
https://www.ratespy.com/daily-mortgage-report-april-14-041413193
Chris
at 9:32 am
Yes, stocks seem cautiously optimistic about the global and American economies.
On the topic of the Canadian economy specifically, did you happen to read the Globe and Mail article included in that same RateSpy update? It’s paywalled, so allow me to copy a couple relevant sections for you:
“A 60-cent loonie and painful days for banks and homeowners: predictions for what comes next
Getting back to “normal” within a quarter or two – the so-called V-shaped recovery – seems to be quite a long shot and a vaccine sounds as if it is still a long way off in 2021.
Unlike the Chinese economy, which is much more dependent on manufacturing and exports, the North American economy relies heavily on domestic consumers and business services. It’s one thing to get back to work, quite another to get businesses and consumers spending again.
Typically, in an economic slowdown, there is an initial decrease in listings as homeowners are reluctant to move or list in a weak market. However, as demand falls and houses remain on the market longer, oversupply begins to build.
What happens next depends on whether financially motivated sellers enter the market, including those who have lost their jobs and those that can no longer afford their oversized mortgages.
At the end of 2019, the ratio of listings to Canada’s total housing stock stood at a historically neutral 5.1 per cent; roughly one out of every 20 homes was on the market. It wouldn’t take much to trigger an imbalance – just one or two more homes per 100. In 1990, for example, the ratio hit 7.1 per cent, triggering a price correction that took some 13 years to reverse.
Today, we have a much higher share of foreign-owned and investor-held properties, with the risk that these owners may liquidate into an already thinly balanced market.”
https://www.theglobeandmail.com/investing/markets/inside-the-market/article-a-60-cent-loonie-and-painful-days-for-banks-and-home-owners/
Sorry Condo, I know I said I’d cut down on the length of quotes, but unless you have a Globe subscription, you can’t read this article.
condodweller
at 3:25 pm
I’m not sure what the economy was doing in 89 but I do recall that the market was way over supplied as hard as it may be to believe today. Also, builders continued to build, especially north of the city despite this over supply. Mind you a lot of the over supply was in condos before they were mandated to presell the majority of the units. However, I also recall that north of the city was largely farmland and I mean north of Steeles Ave.
Unless there is going to be mass forced sales due to unemployment I don’t see a long term housing crash coming, in price at least with the recent demand/supply. With lenders working with owners to keep their homes while we bear the brunt of the effects of the lock down there shouldn’t be a significant crash. If the virus persists and we slowly start going back to work but large number of people will not be able to go back with no means of paying their mortgages it will become a question of how long banks are willing to let them delay paying their mortgages. I would expect the safety net to save a lot of people but there could be quite a bit more who were marginal to begin with who will be forced by their bank to sell. If this happens during a short time period it might cause a crash. Hard to predict though.
BTW please excuse my bad grammar in my comment below, or in general. Most of it is a combination of either using swipe on my phone where I don’t confirm each word or the fact that I’m a fast typer and I think sometimes I’m too fast for my keyboard where letters get dropped. Not sure how to explain entire words dropped but it would also help if I proof read my comments.
@Chris, there is really no need to apologize to me. I’m just a commenter, not a moderator.
Chris
at 3:38 pm
Ah I know Condo, it’s just that I had recently told you I would try to cut down on the length of quotes, and then proceeded to paste another wall of text. Only because the article was limited to G&M subscribers.
condodweller
at 2:56 pm
@Appraiser So, has this article change your position that the recent run up just a head fake?
Appraiser
at 7:21 pm
@condodweller:
Equity markets look pretty choppy right now, but appear to have bounced off of their lows as the article suggests.
Most major North American indices are still down in bear territory ~20% from the highs of mid-February, except the Nasdaq, which is “only” off 15%. Still pretty substantial losses for anyone who sold into this storm.
Could be a head fake followed by a nutmeg (soccer reference), or a real sign that the worst is over. I hope so, but who knows.
jeanmarc
at 9:49 pm
It’s starting the earning season and JP Morgan profit reported a drop of 70%. During the last few weeks, the DOW has recovered over 20% since the drop under 19,000 in mid March. This “recovery” did not have any stats to back up why it just came back other than hedge funds and computerized trading pushing the market back up. The next few weeks of earnings will show whether it was just a dead cat bounce.
Condodweller
at 11:58 pm
It looks to me that markets hit the low point when uncertainty was the highest. Markets rebounded when both Canada and US announced their aid packages. It would not surprise me to see weakness as lower earning are announced.
Chris
at 9:34 am
“The flash estimate for GDP indicates a decline of approximately 9% in March. Even though the basis of calculation is different, in a relative sense, this would be the largest one-month decline in GDP, since the series started in 1961. Overall for the quarter, this flash estimate of GDP leads to an approximate decline of 2.6% for the first quarter of 2020.”
Statistics Canada, April 15, 2020
https://www150.statcan.gc.ca/n1/daily-quotidien/200415/dq200415a-eng.htm?HPA=1
Appraiser
at 12:28 pm
Latest CREA data:
“On the price side, the average sale price for a home that sold during the month was just over $540,000. That’s basically unchanged from the average selling price in February, but it is up by 12.5 per cent compared to the average seen in March of last year.”
https://www.cbc.ca/news/business/crea-march-real-estate-1.5532748
Chris
at 12:38 pm
Next couple lines from that same article, which you unsurprisingly omitted:
“If sales stay low, economist Rishi Sondhi at TD Bank says it is inevitable that prices eventually have to come down, too.
“Listings have cratered alongside sales, as pandemic pressures have forced potential sellers to the sidelines,” he said.
“This is keeping markets balanced and maintaining a floor on prices. … However, the longer economic weakness lingers, the greater the chance that households are forced to list their properties. Such an outcome would put downward pressure on prices.”
Crofty
at 2:07 pm
Remember, though, that the writer has chosen to quote this specific analyst (I won’t call him an “expert,” since I’m not familiar enough with his work to do so) possibly because he expresses an opinion that the writer (or CBC) agrees with, or simply because it provides “balance” in the article.
Chris
at 2:18 pm
Rishi Sondhi has been an economist with TD going on three years. Prior to that, he was a consultant with Altus Group, a housing market analyst with CMHC, an economist with RBC, and research assistant with the Bank of Canada.
It’s certainly possible that the author included his quotes for balance, or because they agreed with his opinion. Also possible they recognized that Sondhi has relevant experience, and has published multiple reports on real estate with one of Canada’s biggest banks.
condodweller
at 3:31 pm
That last quote is basically what I just said above in my other comment. It’s important to keep volumes and prices separate. It’s possible to have price increases while volumes are down if the demand is there. We had this situation during the past decades of run-up.
condodweller
at 4:01 pm
Regarding when things will get back to normal it depends are the virus. I’d love for things to get back to normal ASAP but I’m concerned about all this talk of easing the lock down. I really like NY governor Cuomo’s take on this which is similar to what I’m hearing from our premier and prime minister.
Trudeau said in his statement today that only a vaccine would guarantee a return to normal. Even then I imagine it would take a long time to produce and distribute it nation wide.
It’s nice that we seem to be flattening the curve but if we eased restrictions now it would start heading up again. If anything, we would need further restrictions to fully reverse the curve. What people don’t seem to get is that this all started with a few cases. As long as we see new cases each day the curve will start right up again. Perhaps not as steep since we already had a large number of people already go through it who are now immune, but it would still go up.
What nobody in the media or medical field are talking about is that there are two ways to flatten the curve. One, which is what politicians seem to want to do which is flattening it in a way that the peak infections stay below the hospital capacity level. Two, where you actually stamp out the infections and keep it so low that things can go back to close to normal except for keeping the distancing while in public.
In order to do number 2, we would have to have a way of identifying and isolating those who are infectious but don’t realize they have the virus. The US is at least looking at using technology to do this similar to what contributed to other countries success like Taiwan/Singapore/S. Korea. If Google and Apple can work something out that could be deployed in Canada that would go a long way in helping us out but the question is how long developing the technology will take and are we willing to give up privacy for thing going back to “normal”?
Another thing the mainstream media is not talking about at all is that there are actually three curves, but I don’t want to get into that now as this has been long enough as it is.
Chris
at 4:14 pm
“The US is at least looking at using technology to do this similar to what contributed to other countries success like Taiwan/Singapore/S. Korea.”
Even Singapore, who initially looked to have things well under control, is now struggling:
“No way out: Not even Singapore has been able to avoid a lockdown – The efficient city-state’s contact-tracing has not stopped the virus”
https://www.economist.com/asia/2020/04/11/not-even-singapore-has-been-able-to-avoid-a-lockdown
Trudeau also reiterated today that lockdown conditions are likely to remain in place for “weeks more before we can seriously consider loosening the restrictions”.
condodweller
at 5:29 pm
Yes, I heard Trudeau’s comment. It just frightens me when people are calling for easing restrictions just because we are at the peak of the curve. Those weeks are likely going to be months. This is why I like Cuomo’s press conferences. He is totally upfront and realistic with the situation. His press conferences are worth watching for realistic info. I have no idea how he is as a politician but of all the politicians I have watched he is the best at handling the situation.
It’s a shame about Singapore, didn’t sign up to read the article. Numbers are still way better than the western world. Still only 10 death according to CNN’s list. Taiwan cases vs deaths 395/6, S. Korea 10,591/225 and Singapore 3,699/10. They are doing amazing considering how far ahead they are on the timeline. Even S. Korea looks great considering they were in a similar situation as Italy i.e. sudden outbreak yet they managed to keep deaths to 225 vs Italy’s over 21,000 now.
BTW there is a great interview on youtube with the S. Korean top doctor who managed the outbreak. It was eye opening how the west was not implementing many of the things they were doing. He definitely suggests the use of masks for everyone which the US has made a U-turn on and while Canada still doesn’t recommend it, they have at least changed that they are not dead against it as they initially were.
https://www.youtube.com/watch?v=gAk7aX5hksU&list=WL&index=219&t=1288s
Chris
at 7:03 pm
Singapore is still doing well compared to most countries, but whereas they were initially continuing to live “life as normal”, that has now been cast aside as their case count has risen in an apparent second wave of infections. Unfortunate to see, but shows just how serious this virus is, and difficult it will be for us to get a good handle on it.
With regards to easing restrictions, I think most Canadians are on the same page – https://nationalpost.com/pmn/news-pmn/canada-news-pmn/canadians-want-serious-progress-on-covid-19-before-returning-to-work-poll
Unfortunately, we share a long border with the USA, where they don’t seem quite as committed. Notice the protests in Michigan today, to lift the Governor’s stay-at-home order.
Condodweller
at 12:03 am
It could be that the media is running out of questions to ask but reporters keep asking when restrictions will end during the various daily Press conferences. Politicians keep saying it’s the #1 question they get.
I think a lot will depend on our border crossing policies.
Timothy M Fleming
at 5:36 pm
I beg to differ. It was your Uncle Tim that taught you how to carve a turkey
David Fleming
at 12:08 pm
@ Uncle Tim
You’re right, I don’t know what I was thinking – saying I was self-taught!
You gave me the piece of direction that changed the way I think about turkey carving. You said, “Don’t cut the breast as though you’re slicing, like cold-cuts are sliced in a deli. This would mean only one person gets the outside of the breast. Cut through the breast so that you get deeper pieces, and every piece has the outside.”
That changed everything!
I’m now at the point where I basically carve the turkey backwards. Most people immediately slice into the breast. It’s the first thing they do. I remove the legs and wings, then the thighs, then the dark meat underneath, and by the time I get to the breasts, they bascially come off the bird on their own. Move the carcass aside, and now you’ve got two untouched turkey breasts, whole, to cut vertically, so that everybody gets “an outside piece,” and so that you can plate them as two full breasts (for those who like “presentation.”)
I told Charlotte a few years ago, “When you’re 18-years-old, I’m handing turkey carving duties over to you. So you can watch me until then.” She’s watched me about 4-5 years running now, and I think she’s slowly getting the hang of it. Another eight years to go!
Chris
at 8:09 pm
“Once safer than gold, Canadian real estate braces for reckoning”
https://www.bnnbloomberg.ca/once-safer-than-gold-canadian-real-estate-braces-for-reckoning-1.1422032
Appraiser
at 9:14 am
Yikes!
Bankruptcy Boy calls for “great reckoning” in real estate for 400th year in a row.
Bloomberg pulls out quote from 5 YEARS AGO to back it up.
Must be true.
So scary.
Chris
at 9:27 am
“Real estate was never “safer than gold,” which is why so many of us warned about the peril of too much household borrowing.”
– Evan Siddall, President and CEO, CMHC
https://twitter.com/ewsiddall/status/1250742623679250433
jeanmarc
at 4:01 pm
Interesting how the stock market keeps going up. It is not moving with reality. Only a selected number of stocks (Microsoft, Amazon, Tesla, Apple) are driving the NASDAQ. Most likely hedge funds manipulating UP.
Reality will eventually set in. Unfortunately, the rich will continue to profit.
https://www.cnn.com/2020/04/16/investing/stock-market-dow-jones-recession/index.html
jamie johnston
at 12:43 pm
you know when a brokerage goes out of business? When there is nor more money in the trust account!
Grace W
at 7:07 pm
Hi David,
First time commenting here – thanks for all the hard work you put in blogging – I’ve learnt immensely from your blog, and the diverse comments from your readers!
Just wanted to let you know that Chapters Indigo online have re-stocked in some Ravensburger 1000-1500pc puzzles!! I was just checking for puzzles myself today…saw them online…and thought of you. =) Happy Puzzling!