The Canadian real estate market got off to a hot start in January and February of 2020. However, the COVID-19 outbreak has derailed this success ahead of the typically busy spring season.
Home sales are expected to drop significantly, and open houses have been barred in several key regions. Investors should not expect a return to normalcy until May, at the very earliest.
Bridgemarq Real Estate (TSX:BRE) provides various services to residential real estate brokers and REALTORS in Canada. Its network of REALTORS expanded to 19,111 on December 31, 2019 – up 2.1% from the prior year. Shares of Bridgemarq have plunged 44% month-over-month as of close on March 30.
This week, the company announced that it would delay its annual meeting of shareholders amid the COVID-19 outbreak. It was originally scheduled for May 12, 2020. This illustrates how much longer the lockdown may stretch, and how uncertainty is forcing companies to dramatically re-evaluate their projections in 2020.
Shares of Bridgemarq were near its 52-week low at the time of this writing. When there is a return to normalcy, there is reason to be bullish on housing.
Interest rates are at historic lows and federal and provincial governments will look to loosen regulations to get business flowing again. The near-term pain will be brutal, but investors should anticipate a healthy bounce back when this crisis abates.
There is appeal here for income investors as well. Bridgemarq offers a monthly distribution of $0.1125 per share, which represents a monster 17% yield. How safe this payout is in the current environment remains to be seen.
