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COVID-19 seems to be making a much bigger impact on Canada and the whole world this year than the SARS did in 2003.
In Canada this year so far COVID-19 has already reported over 44000 confirmed cases and 2300 deaths, the numbers are still climbing. While in 2003 Canada had 438 SARS cases and 44 deaths.
in China, the COVID-19 caused 81807 people infected, 3283 deaths so far, while the 2003 SARS only had 5,327 people infected and 349 deaths, it was at least 10 times worse. And COVID-19 has much more serious impact in Europe especially Italy, Spain and USA than SARS did in 2003.
While our present situation is very different and it seems much worse, we may still take some lessons from the past.
While real estate is rightly a much lower concern as we worry about the health of our family, friends and fellow human beings in our communities and around the world during this unprecedented COVID-19 (Coronavirus) public health crisis, many of us are also worried about our jobs as industries face slowdown and our personal finances as stocks take a major hit.
This worry has extended to the residential real estate market.
Given this, it's worth taking a look back at the impact of the 2003 SARS crisis on real estate.
In 2003, Toronto was one of the hardest-hit cities in the world during the SARS outbreak.
The first reported case of SARS in Toronto was in February 2003 and two months later the World Health Organization (WHO) issued a travel advisory against Toronto.
By June, the WHO had lifted the travel advisory and Toronto was also officially removed from the WHO list of “Affected Areas".
So how did Toronto’s real estate market react during the first six months of 2003 of the SARS crisis and in the following six months of its immediate aftermath?
You can see from the chart below that during the first four months of 2003 the change in home sales in the Greater Toronto Area (GTA) were negative when compared to the previous year. Sales picked up slightly in May and June and by July when Toronto was no longer considered an affected area, sales surged by over 60% and remained positive for the remainder of the year.
When looking at the change in house prices, we can see that there was no decline in house prices during SARS. For most of the second half of 2002 home prices in the GTA were increasing in the 10-15% range, which means that the decline in sales just lowered the rate of growth in house prices. Instead of prices rising by 12% per year, 6% became the norm during SARS.
We may be likely going to see a similar trend in the GTA in the coming months, however as the COVID-19 could cause much deeper impact on the global and Canada's economy and job market, the impact could be different.
Home sales in the GTA in February were growing by over 40% compared to last year and prices were growing by just under 20%. Even if fifty percent of Toronto area home buyers step out of the market, we would still have a competitive seller’s market with roughly 2.5 months of inventory. Homes would still sell quickly but instead of getting 15 offers on their offer nights they might get 1-3 offers.
Buyers will still be out buying homes, sellers will still be selling and if we see a bit more calm and balance in Toronto’s real estate market as a result of the Coronavirus, that’s not a bad thing - though, of course, not worth the heartbreaking loss of life.
Take care of yourselves and each other and stay well. Thinking of selling but not sure how to manage your selling in this difficult situation? Please call Peter He at 647-7392618 for an obligation free consultation.
The Chinese buyers are still one of the major players in the Oakville market, their interests to the Oakville real estate still remain strong because of Oakville’s high ranking schools, beautiful streets and amenities. When you are thinking to sell your home, it’s a great advantage to have the different things the Chinese home buyers are looking for in mind, and build those into your marketing planning when we’re pitching to Chinese home buyers.
#1 The Chinese live in a totally different digital world
Chinese new immigrants don’t use Facebook, Google as these are still blocked in China these days, the Chinese have their own social medias like WeChat, or Weibo etc. A lot of Canadian real estate websites are also blocked and they have no access to those sites either. They relied on the Chinese social medias, some home searching Mobile Apps and real estate websites etc.
The Chinese buyers tend to respond more quickly to WeChat messages instead of email or text messages or phone calls, a lot of them have got used to make all kinds of communications through Wechat. There are thousands of Wechat groups, they gather information, find opinions of others through all all kinds of those groups, they post, exchange, discuss different topics including Real Estate through those groups and also circulate hot topics, good properties through the WeChat moments and groups. It’s very difficult for local Canadians to tap into this market because of language and culture barriers.
Education or schooling is one of the most vital factor the most Chinese buyers would take into consideration when picking which area or location to buy a home, they would often refer to the Fraser schooling ranking and rating for both of the high schools and elementary schools in your area, or they get those information their Chinese real estate agents. The areas with more consistent top ranking schools are the hotter areas the Chinese buyers showing more interests, they call these areas Xue Qu Fang ( Superior School Zone Homes).
A change of the school ranking could affect the demand of a neighborhood significantly. For certain areas with schools ranking fluctuate significantly, if you are thinking about selling sooner or later, it might be a good decision to sell when the ranking is high before that changes. As an example, Abbey Park High School was ranked No. 2 in 2018, but the year before it was at No. 42, the new No.2 ranking did make Glen Abbey as more demanding area for the Chinese buyers.
#3 Feng Shui
According to avid believers, Feng Shui accounts for a third of luck. While feng shui remains a mysterious science that skeptics may scoff at, what’s undeniable is that many Chinese tend to abide by certain feng shui rules when it comes to buying property.These factors can make or break a sale, so getting wise can make all the difference, and the developers are now seeing it as so important that they are designing projects with feng shui in mind.
This may raise some brows, but Chinese buyers have a propensity for the numbers 6, 8, and 9, sometimes they are willing to pay a bit more just for these house numbers. Considered lucky numbers in Chinese culture, 6 (六; liù) in Mandarin sounds similar to the Chinese word for ‘flow’, thus 6 indicates ‘everything will run smoothly’. 8 – the luckiest number for Chinese – signifies prosperity and wealth, while 9 in Chinese is similar to the Chinese word for ‘longlasting’ and ‘permanence’. In short, the more 6, 8 or 9 is included in a house number or price, the better. A lot don't like number four, because the Chinese pronunciation of 'four' sounds like the Mandarin word for ‘death’.
As per stats in the areas already with lots of Chinese residents, it shows on average homes ending with "4" are sold around 2.2% less, while the homes ending with "8" are sold around 2.4% higher than average.
If your house number happens to end with 4, as an example, let’s say 2214, if there’s space allowed, you might be able to sell your home faster or even more money if you change your house number to 2216 or 2212 through the city which would only cost you a couple of hundred dollars.
Owning a residential property outright in China is nigh impossible, as freehold property is practically unthinkable in China, where leases are only allowed for a maximum of 70 years. Therefore, the security of a long-term or freehold lease is something Chinese buyers dream of, particularly as many are investing for future generations.
An overseas property means many things to a Chinese investor, whereby status and "face" ( Mian’Zi) is an important consideration. Put simply, a property in a well-known or auspicious location is a sure-fire way for Chinese to convey success and wealth to their peers. With that in mind, make reference to local landmarks, history or geography in your pitch, as this could help sway their buying decisions.
Good numbers for property investments doesn’t necessarily just mean an auspicious 8 or special 6 for their address; they also relate to property yields, as investment return is an equally important aspect that weigh heavily on Chinese buyers. To maximize the appeal of your property, factor in rental yields in comparison to other areas in your locale.
$1 million can get a lot more in Canada than it can in China – particularly in the major Chinese cities, where per sqm property prices are much higher, property features less numerous, and living quarters less spacious. It’s one of the reasons why overseas properties are so enticing for Chinese buyers. So remember to stress the value aspect of your property by highlighting features that a buyer from China might appreciate, e.g. gardens, garage, pools, storage, in-house facilities, indoor garage… even if they may seem commonplace to you.
Remember though, they come from a culture where piles of homework is the norm at school age, and they will be expecting you to have done yours. Make sure you pass with full marks by building the above 8 factors into your pitch. Lastly I’d like to remind you, not all Chinese buyers are the same. Certain things are important for some Chinese buyers, but may not be the case for other ones. Please feel free to call your local multi-culture home marketing expert Peter He at 647-7392618 for a chat.
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