Collingwood Real Estate Market Update – January 2019

January 2019 market conditions in the Western Region of Southern Georgian Bay reflected the more moderate and balanced pace experienced throughout the last portion of 2018 compared to what Buyers and Sellers had experienced over the past few years. Looking back, the Fair Housing Plan was introduced by the Ontario government in April of 2017 to quiet the market frenzy that began in 2016. New mortgage rules were introduced in 2018 that required all Canadian home buyers to undergo a mortgage stress test, even with a down payment of 20% or more. These measures were intended to cool overheated markets and curb risky lending. Many Buyers have been faced with difficulties qualifying for loans under the stress test that ensures Buyers could still afford their mortgage if interest rates were two percentage points higher than the rate they negotiated with their bank.

It’s not surprising that with interest rate hikes implemented in 2018 along with government measures and ongoing supply issues that the number of sales in the Western Region of Southern Georgian Bay in January 2019 were down 16.5% from one year ago.

With the ongoing scarcity of listings and continued demand driving prices upward, the average sale price in the Western Region reported a 29.7% increase from last January, reflecting similar activity reported across the region where the average sale price was up in all areas except Meaford, which reported a modest decline of 3.3%.

New listings were up 13% year over year and even though active listings were up 29.8% to 471 in January 2019, inventory remained at near historic lows.

The Sales-to-New-Listings Ratio indicates the ratio between the number of homes sold and the number of new listings entering the market. With the Sales-to-New-Listings Ratio down from 60.9% last January to 45%, the Western Region is clearly heading out of a long-running Seller’s market into a balanced market. A higher ratio implies a Seller’s market, while a lower ratio implies a Buyer’s market.

With interest rates unlikely to climb significantly in 2019, affordable housing options and strong demand for the vibrant lifestyle offered in the area, the Western Region is poised to perform well throughout the coming year.

PEC Real Estate Market Update – January 2019

You would think that with the January we just had, complete with bone-chilling temperatures, mountains of snow, and treacherous roads, that most right minded people would stay safely cocooned in their homes, taking shelter from the elements, and waiting for some sign of a break in the frigid weather before venturing forth and thinking about real estate. According to the Quinte and District Association of REALTORS®, (“the Quinte Board”) however, that does not appear to be the case in Prince Edward County (“the County”). Rather, despite the fact that the County was particularly buffeted by winter storms, and a Polar Vortex that would not quit, the property was listed and sold in impressive numbers, highlighting once again what a robust market the County is, and how well positioned it is moving into 2019 to sustain steady and stable growth.

Specifically, 34 properties sold in January across the wards that comprise the County. That is just shy of 80% more sales that occurred last year when only 19 properties changed hands in January. Sales did not appear to be restricted to any one demographic or price group but rather reflected the diversity of both the market as well as buyers interested in investing in the County. This appears to be consistent with market trends and forecasts which give secondary markets the edge in performance for 2019 given their comparative affordability advantage (compounded by the challenge of higher debt loads, interest rates and the stress test), and the fact buyers are able to be more creative inflexible in their chosen domiciles be they primary, recreational or something in between with the advent of technology and more flexible working and living arrangements.

Due in part to a somewhat calmer market overall, inventory is up with 395 properties available for sale at month’s end compared to only 243 one year ago, but the number of new listings was down by almost 20% with 87 properties coming onto the market compared with 108 in January 2018. Accordingly, at this pace, it is likely that the market will tighten up even further unless there is a sudden increase in the number of properties coming onto the market.

Prices year over year, given the particular cross-section of sales recorded for January came in virtually on par with last year’s numbers, just under $400,000 ($397,734) compared to just over that threshold last year when it was recorded at $405,711, marking a negligible decline of under 2%. Interestingly, and consistent with these figures, the median price for properties selling in January in the County came in identical to last year with both being calculated at $365,000.

Potentially with a few more properties on the market and a slightly less frenetic pace which gave buyers more of a chance to consider their options and arrange for acceptable financing where appropriate, or potentially for no other reason than it was harder to get to properties while hurdling snow banks or contending with the bitter cold, the properties that did sell took on average 10% longer to sell, enduring 86 days on the market over the holiday and afterwards, as compared to 78 days on average the year previous.

Generally speaking, commentators are calling for a calmer, steadier year with consistent but more rational activity now that both buyers and sellers have had the opportunity to adjust to conditions that are less frantic than the roller coaster they have been riding over the last couple of years. The dominant challenge for the real estate market will continue to be affordability with buyers struggling with the challenge of balancing debt with higher carrying costs due to increasing interest rates and the effects of the stress test. As mentioned, however, the County is well placed to take advantage of steady demand and the desirable profile that it continues to enjoy, and the fact that the spotlight for 2019 continues to focus on secondary real estate markets as the top performers to watch.

Collingwood Real Estate Market Update – Year End 2018

Likely due in part to the ongoing supply issues and affordability challenges for some Buyers, residential sales in the Western Region were down 8% from December 2017 with 81 sales reported in December 2018 vs 88 sales last December.

With relatively limited inventory, and Buyer demand helping to drive prices upward, the average sale price of a residential home in the Western Region was up 5.5% December 2018 over December 2017. Within the Western Region, the average sale price was up year over year in all areas with the exception of the Blue Mountains where the average sale price fell 5.3% to $587,698. The average sale price for The Town of Collingwood was $536,450 up 22.8% from December 2017. Clearview showed an 11.1% increase with an average sale price of $472,083. Meaford was up 3.2% to $494,313 and Wasaga Beach recorded a 5.4% increase with an average sale price for December 2018 of $406,647.

New listings were up 40.8% year over year and active listings increased from 360 last December to 446 December 2018, providing some patient Buyers a chance to jump into a more moderately paced market then experienced over the past few years. Despite that, and as mentioned, residential property inventories remain near historical lows.

In reviewing the past year, we can say with all certainty that 2018 was another banner year for Sellers in the Western Region, with low interest rates, tight supply and qualified Buyers driving average sales prices higher. And, as Buyers continue to be drawn to Southern Georgian Bay, due in part to more affordable housing options than currently available in the Greater Golden Horseshoe, the Region should look forward to continued strong demand for real estate in 2019.

Prince Edward County Real Estate Market Update – July 2018

At the midpoint of the summer season, it is clear that the trend towards market stabilization that began earlier in the year is taking root. Based on the statistics made available by the Quinte & District Association of REALTORS® Inc (“the Quinte Board”) through its Matrix data platform, the fundamentals of a healthy and sustainable real estate market for the wards that make up Prince Edward County (“the County”) appear to be in place. The stranglehold on supply appears to be easing with new listings and inventory being up on a year over year basis, providing buyers with a greater range of properties to choose from. And while as mentioned in our last report, the basis of comparison on a year over year basis as we move into the second half of the year, is the more sane and moderate conditions that prevailed following the earlier overheated frenzy which had gripped the County and much of the rest of southern Ontario in the spring of 2017, buyers appear to be taking advantage of the greater choice of properties available with both sales and average sale price reflecting positive upticks.

Specifically, and for the second month in a row, sales were up marginally year over year, tracking last month’s comparative performance with two more properties selling over the year previous (57 vs. 55 in July 2017) representing a 3.5% increase. Year to date sales, however, continue to lag behind last year’s performance coming in 24% behind last year at this time with a total of 320 properties changing hands thus far compared to 421 by the end of July in 2017.

As indicated, new listings were up in July with 155 properties coming onto the market compared to 118 last year, constituting an increase of over 31%. These latest numbers contribute to a year to date total of 857 new listings, which is 28 more than last year at this time and amounts to a 3% increase.

With the increase of new supply surpassing that of sales, inventory too, is up by over 38% with the Quinte Board reporting 572 active listing at month’s end compared to 414 one year ago. There is no question that the pace of sales has slowed since the frenzied days of the first half of 2017, but demand remains strong and steady despite tighter lending conditions which have introduced an element of, deliberation, prudence, and in some cases caution amongst buyers, all of which has had a diminishing impact on the sense of urgency that was so pervasive over a year ago. It is not surprising therefore that properties are taking longer to sell. The average days on market for July was 66 days compared to 34 last year at this time. All of this has had the effect of restoring rationality, a degree of calm and measure to the market, contributing to a greater sense of sustainability for the long term. Sellers expectations too are having a moderating effect on sales with many unwilling to compromise on selling price, holding out for that prize number firmly implanted in their head by headier times.

The effect of all of these forces combine to keep the average sale price on its upward trajectory with buyers still stepping up to the plate, but sellers demanding near top dollar for their properties. Sales that are taking place, therefore, are fetching prices that continue to push new barriers for prices in the County. In fact, the average sale price for the County came in at $452,493, over 18% higher than last July when it was recorded at $382,553.

Broader economic conditions continue to look comparatively strong looking forward, with positive numbers being generated on a variety of fronts, despite ongoing uncertainty with respect to trade, and financing becoming both more challenging and expensive. Taken as a whole, however, prospects continue to look good for a healthy and stable real estate market for the County as we move further into the latter half of the year.

Toronto Real Estate Market Update – June 2018

Nasty year over year comparisons came to an end in June. For the first time in more than a year, we saw positive variances in the number of sales and average sale prices. It was unrealistic to compare the first few months of 2017 to any period. Those months represented the most frenetic period in the history of the Toronto residential resale market, even more, dramatic than Toronto’s last frenetic increase in real estate prices in the late 1980’s. Last year’s collective market psychosis was fueled by historically low-interest rates, demand that exceeded supply, and an unrealistic belief that house prices would never stop rising. When the Ontario Fair Housing Plan measures were introduced in late April, it was the electric shock that woke up the psychotic market. What the government’s measure couldn’t impact was demand. With a large number of people migrating to the greater Toronto area annually and the limited amount of new supply available to buyers, demand will always remain strong. It’s not surprising therefore that the residential resale market produced such strong numbers in June.

During the month of June 8,082 properties were reported sold. This compares favourably with the 7,893 properties sold last year. It was not surprising that the average sale price also popped in June. In June the average sale price came in at $807,871 a 2 percent increase compared to the $791,929 average sale price last year.  As the chart below indicates, the average sale price for all properties sold in the greater Toronto area has been making a steady recovery since the beginning of this year.

Demand and supply will continue to play significant roles going forward. It is troubling that only 15,922 properties came to market in June. Last year 19,561 properties came to market, a decline of almost 19 percent. Although active listings at the end of June were on par with the number available to consumers last year, most of that inventory represents the residue of the market build-up following the implementation of the Ontario Fair Housing Plan.

What the average sale price belies is the fact that it was achieved notwithstanding that the high-end of the market continues to lag. In June 237 properties were reported sold having a sale price of $2 Million or more. Last year 264 were reported sold over the same period. On a year to date basis, 1,067 properties in this price category have been reported sold, a stunning reversal from the 2,483 that sold last year. June’s results are, however, encouraging, and as continued positive variances are produced through the balance of 2018, the higher-end will begin participating equally with the rest of the residential resale market.

The long-term problem will become affordability. Average sale prices are starting to inch towards the numbers that prompted the Liberal government to implement the 15 percent foreign buyers tax. In the city of Toronto, the average sale price for all properties sold was $870,559, approximately 9 times the average household annual income. The resilience of the Toronto and area market makes it clear that if there is insufficient supply, and growing demand, no amount of government engineering will make housing more affordable. It will take a collective political will at the municipal, provincial and federal levels to address the supply issue. Unfortunately, we have seen no collective initiative in this regard.

Toronto Real Estate Market Update – January 2017

The Toronto and area residential resale market picked up where 2016 ended. In fact it accelerated the pace of sales we witnessed in December. This is unusual behavior for the market in January, usually a slow month, as buyers and sellers kick out the holiday season cobwebs. But these are unusual times, very unusual times.

Toronto Real Estate Market Update – August 2013

The summer months saw mortgage interest rates rise to levels not seen for more than a year. In June buyers could find five year fixed mortgages with interest rates at 2.79 percent. It would appear that those historically low rates are now a thing of the past. By the end of August rates had increased to 3.79 and has high as 3.89 percent at one of the major banks. Although 3.89 percent continues to be low by historical standards, it does represent more than a 30 percent increase in rates in less than two months.

During this same period the Toronto residential resale market has begun to heat up, bringing it to the attention of bankers and the Federal Minister of Finance. The Finance Minister implemented a number of measures to slow the housing market July of 2012, including reducing the amortization period to 25 years for high ratio mortgages. The market has clearly absorbed those restrictive measures. The belief amongst economists is that the surge in sales in July and now in August has been driven by increasing mortgage interest rates and the likely possibility that they will continue to increase during the remainder of this year and into 2014. Buyers, particularly at the low end of the market, may be concerned about the risk of increasing rates and are making accelerated decisions now to purchase homes while they are still affordable. The increase in average sale prices is also contributing to this buyer pressure.

In August the average sale price for properties sold in the greater Toronto area was $503,094, an increase of 5.4 percent compared to August of 2012. In the City of Toronto the average sale price was $518,145. This number is moderated by the average sale price of condominium apartments which represent almost 30 percent of all reported sales in the month of August. Detached and semi-detached properties are becoming very pricey. The average sale price for a detached home in central Toronto is now $1,319,539. In the western trading districts detached homes sold for $ 644,354 and were least expensive in the eastern trading areas, coming in at $538,826. Semi-detached homes sold for $ 788,542 in Toronto’s central core, and sold for $501,230 and $507,819 respectively in Toronto’s western and eastern districts. These average prices represent year over year increases of 4.7 percent for detached homes and 8.7 percent for semi-detached properties.

The least expensive properties in Toronto are condominium apartments. In August the average sale price was $357,572. Although much lower than detached and semi-detached properties, August’s average sale price was 2.3 percent higher than a year ago. Given the rising mortgage interest rates and average sale prices, it is not surprising that the demand for condominium apartments was soaring in August. The 1,280 condominium apartment sales reported in Toronto represent a 21.4 percent increase in sales compared to last year. As a result of all these sales, Toronto’s condominium inventory is rapidly decreasing. At the end of August there were 4,413 active condominium apartment sales. Last year at this time there were 4,657, a decline of 5 percent.

The number of reported sales overall showed a marked increase compared to August 2012. 7,569 residential properties were reported sold, an increase of almost 22 percent compared to August last year. Moreover, these properties sold very quickly. The average days on market for all properties reported sold was only 29 days. In some trading districts the pace of sales was even more dramatic. Properties in the eastern districts continue to be in demand. All sales of detached houses took place in 19 days, and only 14 days for semi-detached properties. Condominium apartment sales were the slowest taking 36 days in the City of Toronto.

Given the prevailing market conditions we can anticipate similar results for September and October. This could change if mortgage interest rates continue to rise and average sale prices make the purchase of some types of properties prohibitive to some buyers. At the other end of the spectrum, being the least expensive, condominium apartment sales will continue to outpace the rest of the market. At the end of August 61,704 residential sales have taken place in 2013. At its current pace the Toronto market will produce more than 85,000 sales, matching and perhaps exceeding the 85,501 sales that took place in 2012.

Prepared by: Chris Kapches, President & CEO Chestnut Park Real Estate Limited, Brokerage