What comes to mind when you hear the word Snowbird(s)? Many Canadians might think of the Canadian Air Show flight demonstration team that travels the world performing aeronautic maneuvers. If you are an avid skier/snowboarder, you may think of the ski resort in Utah that receives an obscene amount of powder days. Side note: I put this ski resort on my must-ski “bucket list” some 30 years ago, and unfortunately, it is still on my bucket list. If you are a bird watcher, you would know that there is a bird affectionately called the “snowbird”; however, the real name of the bird is a Junco. This particular bird got its nickname because a large number of them migrate south in the winter from higher latitudes into much of the United States as the snow begins to fall. That nickname given to the Junco bird brings us to the slang term that most of us think of when we hear the word Snowbird(s): Canadians fleeing the cold winter months and heading south to sunnier and warmer places.
Snowbirds, or Canadians seeking sunny and warm places to spend the cold and harsh winter months, are huge contributors to the southern states. In 2017, Florida conducted a study noting that approximately 3.5 to 4 million Canadians visited the state yearly, and each trip contributed approximately $10,000 USD to Florida’s economy*. What is even more staggering to me is that Canadians own approximately $55 billion of real estate, and in 2017 alone, Canadians bought $7 billion of real estate. I want to emphasize that this is only for the state of Florida. What about the other southern sun-soaked states welcoming Canadian Snowbirds? The number of dollars Canadians are spending south of the Canadian border is in the 100s of billions of dollars.
Fast forward to spring 2020: COVID-19 entered the equation. Canadians scrambled to come home, borders locked down to only essential travel, 14-day self-isolations required upon return to Canada… And to this day, COVID-19 continues to keep borders closed as we enter another Snowbird season. What does this mean for the Snowbirds? And, more importantly to me, where does all the Snowbird money that would be spent in the southern states end up? Remember, the Florida study showed that Canadians owned $55 billion dollars of real estate.
COVID-19 has and will continue to create new trends in the real estate market, and we as real estate investors need to be prepared and ready for these new trends. Some of the trends currently playing out are the following: working remotely (from home), people exiting the cities and heading to the suburbs or beyond, homeowners renovating kitchens, bathrooms, workout spaces, and even outdoor spaces in their current homes, and homeowners selling and looking for a new home that will provide them with what they need and desire during this unforeseen time.
I believe that we can add a new trend to that list. I believe the non-migration of Snowbirds heading south will create a new real estate COVID-19 trend that will significantly influence the real estate market in specific areas of B.C. It is no secret that many Canadian Snowbirds were already doing the horizontal migration versus the vertical or southern migration. Many of these Snowbirds chose B.C. because of health concerns, insurance costs, and even the opportunity to be closer to family that is living in the most tropical place in Canada.
To help emphasize this point, travel insurance broker, Firestone, said to CBC News that he estimated that only 10% of his Snowbird customers were buying insurance and planning on heading south. So where are they going to now? Stay home? Some will, but I believe that many from the frigid provinces between Alberta and Quebec will head west to B.C. They will find their way to the beautiful Okanagan, Fraser Valley, Vancouver, and spectacular Vancouver Island. This migration could be a long and extended migration, or it might be just for a few weeks to escape the cold and satisfy their craving for travel and new experiences. I was recently travelling through the Okanagan and spoke with some real estate agents, resort/hotel owners, restaurant owners, and service providers. They all shared with me that they have more bookings from Snowbirds than ever before.
The upside for real estate owners and investors in these areas, as well as other areas of B.C., will be significant. Think of the millions of Snowbird dollars that are not being spent south of the border. Many of those dollars will now be spent in Canada, and primarily in B.C. Rentals, especially short-term rentals, will be in high demand.
Airbnb opportunities have never been better with a year-round business opportunity for investors. A number of my clients that have short-term rentals throughout the summer vacation months and then transition into long-term rentals through the winter months are salivating at the opportunity of short-term rentals year-round. To me, this sounds like an opportunity to buy a property for short-term rentals, or transition an existing long-term rental into an Airbnb option.
I also see this horizontal migration putting a shortage on the supply side and an increase on the demand side of real estate in B.C., and specifically in the areas that the Snowbirds spend their time at. This trend will take time to unfold, but with the increase of horizontal Snowbirds seeing the beauty of B.C., the mild winters, the favourable dollar exchange rate, amazing Canadian healthcare, cost savings on travel, insurance, vehicles, and more, the aging Baby Boomers and wealthy lifestyle seekers will say goodbye to their current mailing address and make a move out west to B.C.
My passion as a real estate investor is to understand the real estate cycles, trends, and find the opportunities in the market place and then pass them on to other investors. COVID-19 has been a huge disruptor in day-to-day lives, our economy, in the markets, and in real estate. We may not know the outcome—good or bad—of these cycles, trends, and opportunities for months, years, or even decades, however, I do know that residential real estate in the Okanagan, Fraser Valley, Vancouver, and Vancouver Island will stand the test of COVID-19. Could we see the market in these areas slow, prices depreciate, and a post-COVID-19 slump? This could absolutely happen. But looking into the future, horizontal Snowbirds—which will morph into a huge movement of inter-provincial migration to B.C.—increased immigration from around the world, and worldwide inflation (a topic for another blog), the residential real estate market in B.C. will be just fine as we move into the future.
Speaking of just fine, oh my, the market in the Fraser Valley and Vancouver continues to be on fire. October sales volume for the Fraser Valley was up 49% from October of 2019. STR numbers (Sell Through Rates) continue to rise into a very strong sellers market. This of course is creating multiple offers in the single-family and townhome properties. Condos in most cases have been in a balance to a soft sellers market!
What is causing this boom market cycle? Is it the record low interest rates, government stimulus programs, provincial-immigration, inflation on hard assets, remote work opportunities, FOMO, disposable income, COVID retail therapy, or? If you really want to understand and know the latest market trends, best places to invest in BC and Canada, and how to invest wisely in real estate, join me on November 13th at 4pm-6:30pm and November 14th at 9am-4pm for REIN SUMMIT. Join Canada’s top in-the-trenches real estate investors, research analysts, and economic experts for 1.5 days of real estate investing education, strategies, and solutions. Learn how to make sound decisions—based on facts, not emotion—in every and any market condition! This event is normally $199.00 but when booked through eXimus Real Estate Team it is FREE. Space is limited! Email email@example.com or call 604-850-5040 to reserve your spot.
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STR (Sell Through Rate) Formula = Sales ÷ Active Listings + Failed Listings + Sales
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