AZ Digitals Blog

The real estate market in Canada since the arrival of COVID-19 has reacted differently. This is similar to many other sectors where the effects have been evident. Divided into two periods are the effects of COVID-19 on the real estate. The divisions are into long-term effects and short-term effects of the period affected by COVID-19. Talking into a broader context, this global pandemic will be changing the real estate sector in Canada. This is for at least a short term interval.

Evidently in all provinces in Canada, the effects of COVID-19 have affected the corporate world with business shutdowns. Hence, resulting in most people working from home. The increase in remote working operations is not the only answer though. There has been social distancing in public places and following other mandatory measures. All these are precautions associated with COVID-19. The question arises of how it has affected the Real Estate markets in Canada.

The trends of the past few months have shown signs in the real estate sector. Ironically, due to limitations in budget real estate prices have considerably fluctuated up and down with larger intensities. The term ‘Business as Usual’ is highly affected as usually what happens has been impacted due to change in circumstances. These change in circumstances has risen due to the impacts of COVID-19 virtually on the whole business community. As it is highly unclear in this pandemic situation that how the market will behave. The brokerages and real estate agents have started to operate differently with ambiguity on how the markets shall be performing.

SHORT-TERM EFFECTS ON THE CANADIAN REAL ESTATE:

As of March 11th, WHO or World Health Organisation made a declaration. Hence, the declaration clearly stated COVID-19 being a global pandemic. At the same time stats were released from Canadian Real Estate Association, i.e. CREA. Stats showed month of February was particularly hot for year-over-year sales that rose 27% nationwide. Also, an indication of the fact that the busy spring buying season had started early. Also, performances showed incredible results for both Toronto and Vancouver i.e. 45.6% and 44.9% rise in sales transactions for the cities.

Despite all the post-pandemic results variances, we can also expect to see market activity slow down in the sector. Hence, buyers and sellers may reach a stalemate. Sellers will show hesitancy in accepting lower offers while the buyers on the other hand will hold off their home purchase. This is all amid uncertain health and economic conditions rising due to the results of COVID-19. Although these can be termed as short term effects of the pandemic. However, these can be influence generators for long term effects at the same time. The effects of the pandemic can be balanced concurrently as there are some buyers and sellers in the real estate sector who can’t avoid their buying or selling.

There are still those who need to sell and buy right now that is for the sake of relocation for work, or those who have already sold their home pre-pandemic and are looking for another home. Even due to the effects of COVID-19, some buyers and sellers can’t change their decisions. These are known as “Highly Motivated” buyers and sellers. This is mainly as their life is already under the influence of personal circumstances for e.g.: Divorce, relocation due to work, or downsizing or up-sizing quickly.

LONG TERM EFFECTS ON THE CANADIAN REAL ESTATE:

What’s harder to predict is how COVID-19 will continue to be a threat i.e. along with its impacts on individuals, businesses, and the real estate sector. It’s hard to predict because COVID-19 is still not over yet. Most importantly, how COVID-19 has changed the circumstances is a huge question mark itself.

As an example, the case study of the Ontario real estate market is the best answer. While the circumstances are wildly different, the last time the market saw a change was in the spring of 2017. The effects of that cool down in the sector lasted into the second half of 2019 which means at least two years period. However, the effects of the two year period means higher effects of pandemic COVID-19. Since it started in March 2020 and the markets are still under the negative influence of the pandemic.

However, the reality states that the fundamentals of the market i.e. particularly in the GTA and other major urban centers don’t change. Also due to the limited inventory available and also combined with the growth of the population in Ontario’s big cities like Toronto, we can expect a quick recovery. Once the financial markets get into stability from the effects of COVID-19. Similarly, recovery can be much expected once the health risks are mitigated. Bringing stability to the sector after COVID-19 is itself a high necessity.

After many obstacles & challenges during the pandemic COVID-19, there is something positive for the Canadian people and the economy. It is a sudden rise in the minimum wages in British Columbia. This happens as Canada is facing immense difficulties and challenges especially while running small and medium-sized businesses. Minimum wages are just yet another assurance for the people. Especially, the ones working on an hourly basis and zero-hours contracts. Mainly, so that they are able to survive in challenging conditions that are being faced during the pandemic.

These are people from the services industry in Canada. Workers, who are employed on weekly contracts and are dependent on work for their daily survival. Paying the bills, home rentals, and taxes can never be easy. However, while workers are getting their salaries with decent rises in minimum wages, the situation looks far better. Province of British Columbia is an example of the rise in the minimum wages. Hence, as the majority of migrants coming to Canada and they start working on hourly wages. A huge majority are also coming every year to the glowing province B.C.

As part of the ways of compensation & continuing smooth operations during the pandemic COVID-19. This is according to the provincial Govt.’s promises of increasing the minimum wages. The previous stats clearly show that there has been no rise in minimum wages from 2001 -2011.

RISE IN MINIMUM WAGES:

A significant rise of a huge 75% in the province of British Columbia is a true example of the pledge by the Canadian Govt. This related to an increase in the minimum wages soon. The minimum wages are now $14.60 per hour starting from Monday. This is a piece of huge news for the Canadian working class. Hence, it can be taken as an example for the other provinces of Canada that a pay rise is the hour of the need. However, some of them have already done the rise in these challenging and critical times in COVID-19.

As according to Brains, the pandemic plan of the British Columbia’s Govt. is worth $5 billion. It also includes tax breaks and tax deferrals for the businesses. In addition to this, also includes a significant $1.5 billion economic recovery fund. Hence, this fund is an essential part of British Columbia’s latest announcements regards to the fight against the pandemic. It is primarily not only to encounter the pandemic and its ongoing challenges. However, it is also vital that the Govt. should forgo the minimum wage increase. This is a necessity to allow market forces for the determination of rates of pay.

AN OPPORTUNITY IN DISGUISE:

A huge prospective opportunity is the pressure of the pandemic that can be an influence on many radical changes. One of them being a review of the minimum wages in the form of steps taken by the British Columbia province. The economic initiatives should be necessarily reviewed as it has been important for the sake of economic sustenance since Feb/March. This was the period when the epidemic started to spread initially in Canada and the various provinces. According to Pavlov an Economist and an academic, the minimum wage increases should happen automatically through economic growth. However, in this scenario, it’s otherwise, the increase is due to a lack of economic stability.

The statistics in Canada has revealed that many people lost their jobs during the pandemic COVID-19 and during the lockdown phase. The rate of unemployment in British Columbia increased to 11.5%. Hence, it’s a huge 400,000 jobs cut since the month of March.

Further statistics from the Labor Ministry have shown that 60% of people earning minimum wages in Canada are women and 93% of them belong to the services industry. These include cleaning services, grocery stores, and restaurants. Highlights the importance of the services industry during the current pandemic. Furthermore, how far it is important to cope up with the pressure of the pandemic. It also is evident that how both genders in British Columbia alone are fighting the pandemic. The ongoing struggle that Canadians are combatting every day. A significant rise means rapidly making measures as many people will be hired soon for jobs in the services industry. An expected rise in the rate of employment is a fair advantage for the citizens of British Columbia.

MINIMUM WAGES INCREASE IN OTHER PROVINCES:

The minimum wage increase in Quebec happened on May 1st. However, with the rest of the provinces i.e. New Brunswick, Newfoundland and Labrador, the Northwest Territories, Nova Scotia, Prince Edward Island and Yukon, the wage increase happened on 1^st April. Interestingly, all these provinces realized this importance during the challenges of the pandemic as the economic instability reached higher levels.

Leading your team into a Post Pandemic world is itself a huge challenge after a long break Post COVID-19. Even in the midst of what’s happening many sectors are still not fully opened and need opening up with a radical change management strategy.

According to Kotler’s model of Change management, there are some key measures that as a leader one needs to exhibit while ensuring change strategies. These include Creating urgency, forming a powerful coalition, creating a vision for change, communicating the vision, removing obstacles, creating short-term wins, Building on the change, and anchoring the change in the corporate culture. In this model for change management, most of the factors are easily applicable in the Post pandemic comeback.

However, there is a huge role that the leaders will have to play to make sure that the change management strategies take place effectively while leading. Communicating and creating the vision for change is one of the most important while the corporate sector is opening up again after a long break due to the Pandemic COVID-19. Building on the change and anchoring the change is the rest of the two measures that will definitely help in implementing the change in the corporate world and the environment in place.

HUMAN NEEDS IN THE SHELTER-IN-PLACE PHASE:

This is the phase during which companies worldwide have sought to ensure their worker’s physical safety. Companies have in addition to the measures also implemented work from home measures. As well as sanitized essential areas and shifted operating models. Contactless delivery is yet another significant example which many companies have adopted to avoid the pandemic.

Apart from safety, they are working for the assurance of security as well which is another key and primary concern. Many companies have made sure that employees keep on working on payrolls for as long as it is possible. Alternatively, some companies have increased pay for front line team members and core workers. Many companies have established employee relief funds for the sake of addressing change on an urgent basis. Flexibility is also evident by senior executives and the Board of Directors who have cut down their salaries.

A huge question is how are leaders able to address their worker’s higher-level needs during the pandemic? Leading with vision and leading with a kind of singular force is the hour of the needs for leaders. The type of leaders that are most needed in times of Pandemic needs to have a greater vision. The leaders are the ones with a strong analytical and focused mind. Having a positive approach and a vision for change while demonstrating vulnerability and empathy. A combination of a science-based approach with a human touch is what is needed to undergo leadership challenges effectively.

HUMAN NEEDS IN THE RE-OPENING PHASE:

As many companies in Canada are planning to re-open in the opening up phase. They are bound to take some key steps in the form of precautionary measures and key implications. While preparing for the next phase the spectrum needs to be broad for their employees and their needs. This is apart from just creating a physically safe workplace to other mandatory measures. As an example, the companies are considering the following measures that span the full range of human needs. Some key points for companies and leadership while leading are as follows:

• Key highlights on how the activities of the companies are contributing to the common good. At the same time making a huge difference in people’s lives.
• As part of crisis management, the company must define the conditions that will ensure the safe re-opening of the procedures. These include in-home services to offices and stores.
• Celebrating the inspiring news a way to tackle worker’s mental health problems while leading into Post COVID-19.
• The company should make sure that they bring back as many workers as possible Post COVID-19. This is essential for the own good of workers and their simultaneous team commitments at work.
• Highlighting the roles that employees can play while they are back at work. This will definitely give them back their attitude at work as it used to be Pre-COVID-19.
• Ensuring honest communication at professional levels with the employees. The communication should be truthful, humane, and caring to deliver them that the world is constantly changing. Also highlighting that some things that are not changing are the company’s core focus and their corporate values.
• Apart from bringing back maximum employees, team communication with those working remotely should have special attention. They must have in their minds the vital importance of working remotely.