5 Ways the Return to Work Could Impact Canada’s Real Estate Landscape
At the beginning of 2021, 32% of Canadian workers aged 15 to 69 worked the majority of their hours from home. In 2016, that number was only 4% according to Stats Canada. Though some believe that the changes to our working styles are permanent, it’s likely that we’ll see somewhat of a return to work for many employees if COVID-19 cases fall and remain relatively low.
There are many ways the real estate market could react to more and more Canadians returning to work, here’s a look at some of the potential changes we could see take place over the coming months and years.
1. Renters could return to city centers
The return to work in major city centers is likely to draw more renters back to downtowns across the country. Transit ridership plummeted in cities like Vancouver, Montreal, and Toronto during the pandemic, which all saw less than 50% of the riders in 2020 than they saw in 2019. Should transit systems continue to be a less than desirable option for workers, moving within walking distance of the office could be an alternative for renters across the country. Few major North American cities have built more apartment units per capita in the last decade than in Canada’s three largest metropolitan areas, and with softening rental markets, inventory shouldn’t be a problem. The return of urban centers will be one of the most important trends to watch that could influence the market, as busy restaurants and nightlife require more workers. Returning hospitality workers renting closer to their places of work would be a major boost to the rental market.
Another potential situation that could be unfolding is the return of more renters to areas near post-secondary institutions. Remote learning will continue to be the preferred method of education across the country for the remainder of the year, but should the return to the office prove to be successful this fall, the return to school could be next.
2. More renters lead to more investors
As renters return to city centers, expect investors to follow. Single-family detached home inventory is scarce, but investors currently have more options in the Canadian condo market. Greater Vancouver condo prices pulled back a bit in July 2021, and are currently flat from where they were three years ago. With the Canadian market finally cooling after a peak in March 2021, sales of condos have consumed a rising share of the market.
More renters, more immigration, low interest rates, and flat condo prices should continue to push investors off of the sidelines and into the resale market in several major Canadian cities. We’re already seeing investors jump into new developments at a high rate, as pre-builds have become an attractive option for those looking to secure today’s interest rates, among other reasons.
3. Work flexibility could continue to make the suburbs desirable
Though the inventory for detached homes and townhouses may be scarce, that doesn’t mean that the preference trends we’ve seen from buyers will drastically change with a semi-return to work. For some, commuting two days per week will make a move to the suburbs more desirable, especially if their employer announces that a flex schedule will become permanent for their position. Expect people in this situation to continue to weigh the options of a move outside the city, where a down payment goes further per square foot than it would in a city center.
Townhouse inventory is certainly one of the most interesting developments we’ve seen throughout the pandemic and is another reason that the suburbs could continue to be an attractive option. Townhomes continue to come at a discount compared to detached homes, and developers are building quickly to accommodate the demand. They typically offer enough space for a home office, meaning that buyers who only return to work for a few days a week could still have their needs met from this style of property.
4. Semi-remote work should make home offices essential
With many workers returning to the office for just a few days a week to start, there will be a continued interest in renters and buyers needing spaces with home offices. Many employers are finding that remote work is a viable option for their business, with only 3% of new teleworkers reporting that they work shorter hours than they did when they went into the office.
Buying or renting a home with a home office or an area that can be converted into a home office will continue to be one of the most desirable features for Canadians seeking housing, even as we return to work in larger numbers. This is a change that new developers and those tackling renovations will keep in mind, making a demand for home offices one of the trends brought on by the pandemic that is here to stay.
5. Office space needs likely won’t shrink drastically
If you’ve been thinking that fewer workers coming into the office means that the need for commercial space will decrease, think again. Though fewer workers will be heading into the office on any given day, increased square footage will be required to provide adequate social distancing.
That being said, you can still expect some changes at offices across Canada, especially those where employees are working on higher floors in office buildings. Long elevator lines (due to limits on elevator occupants at a given time) will need to be addressed, whether that’s by scheduling trips at specific times, staggering schedules to avoid congestion, or moving office space to lower floors when possible. Elevators are just one of the many reasons why staggered scheduling will become the new normal in the months to come.
Whether it comes quickly or slowly, the return to work will no doubt have a significant impact on Canada’s real estate landscape for years to come. Renters, buyers, sellers, and investors will watch and adjust to the trends in kind, with changes in housing preferences likely to continue throughout the near future.
Information obtained from rew.ca and By Justin Kerby