Monday, August 10, 2020

We are living in anything but the new normal

We are living in anything but the new normal

Regardless of when we all manage to successfully navigate our way through the COVID maze (and we will get through it), a lot of things are going to look and feel different.

Bureaucrats and politicians have gone to great lengths and worked overtime to instill in people fear of the virus and they have succeeded in scaring the hell out of millions. Many of those people will not soon lose their fears, even as the threat from the virus dissipates, perhaps even after an effective vaccine is available.

From the time the virus locked down most of the world, people have been calling it the “new normal” but we are anything but living in a “new normal”.

The “new normal” if that’s what it’s finally called, arrives after the virus leaves, a “new normal” that will evolve as fears are soothed and new lifestyles emerge.

It begs a lot of questions wondering what the new lifestyles will be.

Where will people live? Where will they work?

How will they travel between the home and the workplace? Or will they?

Will there be a push-back on building and buying in 30- to 35-storey high-rise condo buildings with 300 apartments and two elevators, where high densities are designed to be the norm that makes city planners and urbanistas happy?

How many people now living in those towers and other high-density areas and developments will want to sell their homes, putting them on the market with the potential of adding to the glut of apartments in Calgary and further depressing prices?

Will the City of Calgary ease the high-density mantras of its urban planning guide, Plan-It Calgary, which favours high-density developments?

Not everyone will return to working in an office environment.

Will new home builders redesign their homes to include more and larger spaces that are equipped as truly office space? Will renovators find work to do the same in existing homes?

Will public transit/LRT usage decline, as people work from home or feel uncomfortable and fear being squished into buses and trains with other riders?

When will historically low mortgage rates, supported by the Bank of Canada, begin to climb again? As more people return to work, will they take advantage of the rates to buy homes, especially first-time home buyers?

Will people who bought homes near their places of work sell those homes, opting for living in the smaller towns orbiting Calgary, such as Crossfield or Carstairs or Strathmore or High River, where home prices are lower, life is slower and schools are less crowded?

Or will they move to towns and low-traffic rural estate areas where homes are more expensive, but where specific lifestyle choices are available, such as Canmore?

There is evidence this is already happening in the United States.

Not long ago, Glenn Kelman, CEO of online real estate portal Redfin, told CNBC the demand for homes has shifted to rural areas as people react to the virus and look to move out of dense urban areas.

“We have seen that people are more interested in that house at the foot of the mountains by the lake,” said Kelman. “Rural demand is much stronger right now than urban demand, and that’s a flip from where it’s been for the longest time, where everybody wanted to live in the city. We’ll see how it comes back, but there seems to be a profound, psychological change among consumers who are looking for houses.”

Joel Kotkin, presidential fellow in Urban Futures at Chapman University and executive director for the Urban Reform Institute in the U.S., writing for New Geography, also sees it.

“The COVID-19 pandemic will be shaping how we live, work and learn about the world long after the last lockdown ends, accelerating shifts that were already underway, including the dispersion of population out of the nation’s densest urban areas and the long-standing trend away from mass transit and office concentration towards flatter and often home-based employment,” said Kotkin. “Amid 20 years of fanfare about how big, dense cities are the future, the country had kept spreading out with nearly all population growth since 2010 occurring in the urban periphery and smaller cities. As a new study from Heartland Forward, where I am a senior fellow, demonstrates, both immigrants and millennials — the key groups behind urban growth — are increasingly moving to interior cities and even small towns.”

Initially, New York City had the highest number of COVID cases, not surprisingly, given the median population density is 56,600 people per square mile. By contrast, Calgary’s density is about 2,500 per square mile.

“Suburban, exurban and small-town residents are, of course, vulnerable too, but far less than subway riders who live in crowded apartments,” said Kotkin. “The people outside of big cities, for example, get around in the sanctuary of their private cars and don’t have to push elevator buttons to get to and from their residences. Most rural areas, outside of some resorts, have suffered far less from the virus, benefiting from less crowding and unwanted human contact.”

There are still a great number of uncertainties of the effects the virus will have on all facets of life and how long it will take to navigate the maze. Only until then will the questions posed here be answered.

What is certain is the real estate landscape is going to look and feel much different.

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