HOW WILL FORCING WORKERS BACK TO THE OFFICE AFFECT HOUSING?

The housing industry seems to be going through a massive slowdown these days, the likes we haven’t seen since the early 90s. There are many contributing factors to the slowdown, of course. Inflation, crazy house prices, increased interest rates and the old supply and demand routine. Since 1997, when things started to pick up again, the sales and price increases have pretty much been on the rise every year with the brief exception in 2008/09 when things went downhill in the U.S. Canada wasn’t as affected by that downturn due to the stringent ways of our banking system. So the market picked right up where it left off in 2010 leading to some pretty crazy bidding wars and price increases in 2016/17. Then the market just flat-lined. Buyer fatigue and prices were the main cause. Then Covid hit and changed everything. In a massive way. People panicked. The need to escape the confines of Toronto was first and foremost. Companies were forced to let employees work from home. That was something that was seldom considered before, unless you were independently employed – like a writer, artist or Real Estate agent. And that move caused huge price increases and bidding wars in places that weren’t used to that kind of furor. Northumberland County, The Kawarthas, parts of North Durham and others saw the average house price skyrocket. From 2019 until early 2023, that was pretty much the status quo. Builders were ramping up by building more condos than anyone could ever have imagined. Now we are faced with a new dilemma. Businesses are now demanding these same workers to return to the offices. So if you bought a house in Seagrave and were enjoying the luxury of working from your home den, you may now be forced to consider the daily commute to Toronto. Either way you look at it, this just isn’t going to end well. People that bought out this way certainly can’t afford to go back and buy in the city. The commute may be onerous and expensive. As a result, many may be forced to retire or look for employment locally. Many already have. The mass of condos in downtown Toronto are now sitting empty and the slowdown in sales in the city is the largest in years. Maybe a balance can be struck. You can work from home 2 of the 5 days. That could also ease the perpetual traffic tie-ups in the city. Some compromise has to be made. There will end up being fewer investors that only helped to drive prices up in the midst of the pandemic. Rents will also have to drop to become more affordable. In the outlying areas where prices went nuts, maybe there will be some moderation there as well. It used to be that the further out you went from Toronto, the less you would pay. But, again, the pandemic changed all of that – and not for the better. In the meantime those same builders holding the condos in T.O. are now going to have to consider re-pricing them to make them more attractive to buyers. In the long run that can only be a good thing for the consumer.