Future of the work from home model due to pandemic
How will a return to the office impact the mortgage market?
Fergal McAlinden
other
Lenders could increasingly seek clarification on whether work-from-home arrangements are indeed permanent
As Canada edges towards a tentative reopening and easing of COVID-19 restrictions across the country, one of the most intriguing trends to follow will be the future of the work-from-home model.
Amid the many changes wrought by the pandemic era, the advent of the home office revolution has surely been one of the most transformational, with downtown workspaces emptying as COVID case numbers across the country soared and stay-at-home orders took effect.
That had a corresponding impact on Canada’s housing and mortgage markets as tens of thousands of city-dwellers set their sights on a move elsewhere following the realization that they could perform their job as effectively in the suburbs as in the city.
The effect on some of the country’s largest cities was striking. Statistics Canada reported that over 64,000 people left Toronto for other parts of Ontario between June 2020 and June 2021 – a 14% spike compared with the 12 months prior.
Montreal, meanwhile, saw a stunning 60% increase in residents moving to other parts of Quebec, with almost 40,000 people relocating to other areas in the province.
It’s currently unclear whether remote working will remain as prevalent when it’s safe for offices to reopen, even if most provinces ease many COVID-19 restrictions in the near future, as planned.
Read next: Is the urban exodus about to slow down?
Last October, Statistics Canada said that around 40% of jobs in Canada could be done from home – with the Organization for Economic Co-operation and Development (OECD) also reporting an overwhelming preference for home-working arrangements among surveyed companies.
That organization’s survey, which polled thousands of firms across 25 countries, revealed that 90% of workers would prefer to do more of their work from home in the future. Managers expected about 60% of their workforce to do more of their work from home, and generally said two to three days of home office was the best arrangement.
The question is one that’s already having an impact on the mortgage market, with one Ottawa-based broker noting that clients should be able to clarify whether their work-from-home arrangements are indefinite or if they’ll eventually be called back to their downtown offices.
Chris Allard (pictured top), of Smart Debt Mortgages, told Canadian Mortgage Professional that the question had become an important one for lenders with the future of the home working model so up in the air.
“When we talk to our borrowers and they say they work from home, we really ensure that they distinguish whether it’s short-term or indefinitely working from home,” he said, “because lenders will ask that question as well.
“It’s not logical for you to be moving to Ottawa [from, for example, Toronto] if your employer is saying that they may be calling you into the office next week or month. So, lenders are being wise and asking those questions up front, and we have to make sure that it does make sense.”
That usually means that the employer must confirm that remote working arrangements are possible for the would-be homebuyer, Allard said. Otherwise, the client’s existing job security could be called into question.
“If they’re not willing to confirm that, in most cases we’re [telling] clients that [they] probably need to be getting a job that does accept remote work or an Ottawa-based job,” to put the lender at ease, he said.
Read next: Toronto housing market – long-term impact of unaffordability crisis
While Allard emphasized that clients leaving the Greater Toronto Area (GTA) or the city itself to move to Ottawa didn’t constitute a huge chunk of the company’s business, he said that there had been an uptick since the beginning of the pandemic in 2020.
The average price of a residence in Ottawa climbed 18% year over year in December 2021, hitting $710,000 – but that still represents a fraction of the skyrocketing cost of a home in the GTA.
There, the aggregate price of a home surpassed the $1.1 million mark, having risen 17.3% in 2021 – and with a further 11% spike in the cards for this year.
“Especially with a lot of people having the ability to work from home, and their company transitioning to a work-from-home model, we definitely are seeing a trend of the GTA person moving to Ottawa,” Allard said, “whether that’s moving back to Ottawa or moving [here] for the first time.
“The young families who have, in most cases, high incomes are realizing that they can perhaps have a better lifestyle in the Ottawa region, given that they can work from home.”
The post-pandemic future of that trend across the country remains to be seen.
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