Yellowknife’s housing market is a strange place right now. With severe restrictions on movement, business is slow. Few people have any desire to physically show their home.
Adrian Bell, broker and owner of the city’s Century 21 Prospect Realty, says the company has a “long list” of measures in place to help combat the Covid-19 pandemic. Some sales are still happening.
“There are those that have no choice – who have a job in the south, or have a job to come to here and have to plan their [mandatory self-isolation] but are still proceeding with purchases,” said Bell.
“But without a doubt it’s a reduction in our volume of work from last year.”
Yellowknife open houses offered by Century 21 and Coldwell Banker have been cancelled as the NWT’s chief public health officer asks residents to stop gatherings of any size.
Homeowners looking to sell are being asked to make sure everything is sanitized, said Bell. Buyers are being vetted “to make sure we have people who are serious, who have been pre-approved.”
He added: “We are trying to discourage the physical showing of homes. If somebody does want to see a home, we’re just trying to make sure that we know this is somebody serious.
“But what we are really trying to do is push people to our virtual tours. We’re taking more photos, using high-quality HDR photography, and trying to give people the best views of homes from their living rooms.”
Coldwell Banker is similarly making the move to video, telling clients its realtors will provide “personal video tours” of most listings so interested buyers don’t have to leave home.
Opening during a pandemic
Kim Knutson had only just launched her own real estate agency in Yellowknife, Re/Max North of 60, when the coronavirus pandemic hit.
“I was really panicking about 10 days ago,” said Knutson on Tuesday. “Oh my God, what have I done? This is a crazy time.
“And then I listened to a podcast about leading through difficult times, which talked about this being a time to prepare for what’s next.
“Now, I’m using this time to get my systems in place and I kind-of feel like it’s a bit of a grace period. I’m doing training and using the time to prepare for when it’s over.”
Knutson has so far amassed seven listings. She described the process of showing one vacant home to prospective buyers while keeping physical distancing in place.
“We went to the house before they got there – it was vacant, that’s why I was able to do this. I unlocked the front door, wearing gloves. They showed up, I stayed in the car, they did their viewing, and I locked up after.”
Many other clients are “waiting in the wings,” Knutson said, for a better time to move – but for some, time is more pressing. One couple is paying monthly to stay at a hotel in Yellowknife until they can find somewhere to live.
“They are desperate to find something,” said Knutson, “but their price range is under $400,000, which is really popular, and there’s nothing in this price range.”
Military transfers on hold
Knutson says a lot of her clients are in the military, waiting to find out if their postings will go ahead as planned.
There aren’t a lot of answers yet for members of the armed forces who were preparing for transfers into or out of the territory.
The Department of National Defence (DND) and Canadian Armed Forces (CAF) told personnel earlier this month that “formal guidance with regard to postings will be coming out shortly.”
Canada’s military has termed its response to the pandemic Operation Laser. Current priorities include maintaining “operational effectiveness and readiness, preserving essential health services for members, and maintaining responsive support to civil authorities as part of the Government of Canada response.”
In a March 27 letter to military personnel, Chief of the Defence Staff General Jonathan Vance said: “As a result of the reduced ability for movement within Canada and around the world … the annual posting season will be seriously disrupted this year.”
Vance said issues adding to that disruption include a lack of commercial lodgings, reduced certainty when it comes to real estate and baking, and the risk of spreading Covid-19 while house-hunting.
Vance says the annual posting season is now expected to conclude by the end of December. Moves in progress are having their dates adjusted to reflect 14-day isolation requirements.
What happens to your contract?
With all of this uncertainty, what happens if you find you need to back out of a deal?
Bell says Century 21 is introducing different conditions and terms to allow for delays without breaking a deal.
“We’re trying to build in conditions up front, so people don’t have to break a contract,” he said.
Ed Gullberg, a partner at McLennan Ross says he’s been doing real estate law for over 30 years and it’s relatively rare for people to not complete a deal.
“I can count on two hands the amount [of times that has] happened in 30 years,” he said.
Gullberg said there remain legal ramifications to backing out of a real estate deal. The related law hasn’t been suspended because of the Covid-19 pandemic.
“People who may have entered into contracts … might find that they waived their conditions on their offer,” he said. “[If a buyer now has] financing and is able to proceed with the purchase, at that point the agreement then becomes completely binding.”
Gullberg said if a purchaser tries to leave the deal after conditions have been waived, they can be sued for breaching their contract.
“Until those conditions are waived – if they don’t get their financing, for example – they can terminate the contract and walk away without fear of being sued,” he said. “The world changed quite quickly with Covid-19.”
Asked what he sees moving ahead for real estate, Gullberg says in the immediate short-term there are likely to be more defaults.
“But in the longer term we’ll just see deals not happening,” he said.
“People just won’t buy houses until there’s some more certainty around their jobs, financial circumstances, and what is going to happen to the economy after the immediate crisis is over.
“I think a lot of people will be spooked by what’s going on.”