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April 10th, 2020

Impact of Covid-19 on Outaouais Real Estate

We have been asked by many clients what is happening with the real estate market in Quebec and specifically in our Outaouais region and especially with regard to the effects of the Covid-19 pandemic. As you are aware the Quebec government has closed down most companies and businesses other than those deemed essential. Although in most provinces Real Estate has been designated as essential and Real Estate Brokers have remained open for business, in Quebec the business of real estate is currently NOT listed as essential by the province. However despite this real estate listings, promise to purchases and sales may take place as long as individuals have no personal physical contact and all necessary precautions are taken.

Some important notes to be aware of during the Covid-19 crisis:

- There are instances where people have already sold their property prior to the pandemic or for other reasons (estate sales, divorce, work relocation's, financial stress or bankruptcy...) must find a new home and move in a timely fashion. So there are still some people that may be looking to buy or sell even through the difficulties associated with the pandemic.

- If a property already had an accepted offer prior to the Covid crisis, all parties are still bound by the promise to purchase however it may be necessary to amend some of the deadlines in order to respect the no physical contact regulations.

- As of April 1 Notaries have been authorized to finalize and register sales remotely, using electronic means so closing an act of sale is not an obstacle.

- Real Estate Brokers have access to electronic signatures, video calls, emails and of course by phone for identification purposes, to negotiate a promise to purchase or to finalize or modify any sales or brokerage contracts for sellers and buyers without any personal contact.

- YES, Real Estate Brokers may continue to list any property for sale but any close physical contact, personal visits, showings or open houses CANNOT take place. However a Seller may still sign a brokerage mandate to sell with a Broker and provide their own photos and/or video, as well as all the necessary information, measurements and documents via email, thus allowing the Broker to list the property on the MLS system, promote the property, 'show' it through video and photo tours and potentially negotiate offers remotely. Although the chances for success may be limited for now, promoting the property immediately may give Sellers a jump start on the normally busy Spring market and when things do return to normal.

- Note that the OACIQ (Organisme d’autoréglementation du courtage immobilier du Québec), the authority of Real Estate Brokerage in Quebec, is working hard to get the province to add Real Estate Brokers back onto the essential business list and it is very likely that real estate will be one of the first businesses to be mandated to go back to work in the coming weeks, although in a modified way and in keeping with all precautionary measures possible.

- Inspections (building inspections, bank evaluations...) of a property will not be possible but in certain cases may not be needed by the buyer or may be postponed until after May 3 (or later if the opening date for real estate business is further delayed by the province).

- Promise to purchases may be negotiated and accepted conditional to a visit by the Buyer after restrictions have been lifted (so far May 3) although this may not be acceptable to the Seller.

- Vacant lots and land can still be visited by Real Estate Brokers in order to list and potential Buyers may go and visit vacant lots or land and proceed with an offer, using phone, email, video calls and electronic signatures.

- Extra precautions and conditions may have to be written into a promise to purchase or a brokerage mandate to sell. For example should a Buyer lose their job during this crisis after an offer has been accepted it could cause the offer to fail and there may be legal and financial liability and risk should this not be addressed properly in the promise to purchase.

 

Real estate market statistics for 2019

Overall the real estate market was doing very well in the Outaouais which experienced a very positive upsurge, having an increase of over 13% between 2018 and 2019, comparing total number of sales, on top of which the amount of active listings decreased by 13.6% in 2019 indicating that inventory was being sold off and fewer new listings were coming onto the market.

Breaking it down into regions (difference between 2018 and 2019):
- Gatineau total number of sales were up by 16.8%, active listings were down by 22% (Hull increased most by 20% in sales numbers) .
- Chelsea total sales up 14% in number and active listings down by 13%.
- La Pêche total sales up by 10% listings down by 7% (Wakefield region increase in sales of 7%, Ste-Cecile-de-Masham slightly down by -1.9%, Wolf Lake region doubling from 10 to 20)
- Cantley increased sales by just under 9% however Mont Cascades had a poor showing decreasing by 26% in number.
- Val-des-Monts municipality held its own showing a modest increase of less than 1%

 

What happened in 2020

It is very interesting to note that the real estate market in the Outaouais was starting off positively in January through March of 2020, especially in Gatineau where the number of sales during this period were way up by over 31% compared to 2019! This compared to sales increases over all of Quebec which experienced an already impressive 18.5% increase for these first 3 months of 2020. The rural areas of the Outaouais however did not do as well; Chelsea, Cantley and La Pêche showed less of an increase for the start of 2020, just holding almost even in sales totals compared to 2019, nevertheless these rural areas often improve later in the year generally seeing a greater seasonal fluctuation in sales numbers compared to the urban areas.

 

The future effect of the Covid-19 pandemic on Outaouais real estate

Frankly no one can really tell for sure, there are too many factors that are yet unknown. The duration of the crisis, the final impact on Buyer and Sellers jobs and financial situations, Buyer confidence, interest rates, and the future state of the economy all create a number of questions. There are some with an optimistic outlook saying that we will not undergo a major real estate crash, that after the crisis nears to an end the markets will rebound and resume, some even say this is just a pause in the market. Indeed it is possible that pent up demand, previous positive figures from 2019 and the start of 2020, as well as continued super low interest rates - which would likely be maintained to spur on a recovery - would support an active and strong real estate market for the end of 2020.

Due to this current pause in the market, asking prices have not changed as yet and any impact on actual sale prices can not be measured because most of the sales that are finalizing now were negotiated prior to the crisis. However there are many cases of sales failing to close or being delayed due to Buyers losing jobs and income, and banks are reluctant to release funds due to increased financial risks. Overall it may take time for Buyer confidence and Buyers financial ability to recover so a pessimistic view of the coming conditions when the real estate market reopens would be an increase of listings, fewer Buyers and a downward pressure on prices.

There is no doubt that over the shorter term until this crisis is over the real estate market has and will continue to slow down dramatically and even come to an almost complete stop but real estate always rebounds and has always provided for a very solid investment over medium to longer terms. Many people may have to reevaluate their immediate plans and time-frames but hopefully things will return to a much more stable footing in the not so distant future.

I am here to answer any real estate questions you may have during these trying times. My sincere thanks to all the hard working people still hard at work, especially those health care and emergency workers who are putting themselves on the front line to help us conquer this invisible enemy. Thank you and stay safe!

Christian