Prince Edward County Real Estate Market Update – September 2017
Posted by Gary Goba on Oct 16, 2017 in Real Estate Market Update
Despite the fact that property sales continue to lag behind last year’s numbers, ongoing strong demand combined with limited inventory contribute to persistently tight market conditions for Prince Edward County (“the County”) moving into the fall and the final quarter of the year. After the market adjustment in the Greater Toronto Area over the summer months following the imposition of the foreign speculators’ tax as well as other initiatives to cool the overheated market, some of the urgency in the County market began to dissipate, but desirable properties continued to find buyers. And, unlike the Golden Horseshoe, the County did not experience a flood of listings with sellers trying to take advantage of what they perceived to be the top of the market. Rather, the pent-up demand for County real estate continues, and limited supply is doing little to alleviate this problem with other market indicators providing evidence and confirmation of ongoing strength and stability to the market. As both prices and demand appear to be stabilizing elsewhere in southern Ontario, the County may face an even greater inventory problem as buyers return to the market with greater confidence and conviction, unless more sellers decide to ease the supply bottleneck and list their properties for sale.
The Enhanced Statistics Statistical Query Report released by the Quinte & District Association of REALTORS® (“the Quinte Board”) for September confirms that at month’s end only 74 new listings came onto the market which is 20% fewer than last year when 92 were listed. And that is a significant negative differential from a season where properties were already in short supply. Year to date, the number of new listings is down by 5% (1002 compared to 1050 last year at this time). Available inventory, however, is for all intents and purposes on par with last year’s tight market conditions with 371 active listings being reported at the end of the month compared to 359 last year, constituting a negligible 3% differential, likely attributable to a combination of scarcity of supply and decline in sales.
As indicated, sales are down with 51 being report in September 2017 compared to 72 in the same month in 2016, a decrease of 29%. Year to date, because of the particularly strong sales recorded earlier in the first half of the year, 2017 and 2016 numbers are virtually a wash at this point (down only 1%) with 524 sales thus far compared to 531 at this time in 2016. But a review of other statistics produced by the Quinte Board tracking market performance in the County reinforces the comments made in last month’s report that lower sales are due to a variety of factors, some of which are set out above, and do not in and of themselves a single picture paint. Rather, for a more complete and informed assessment of the market other indicators must be consulted for a balanced perspective. For instance, the average days on market for properties sold in the month continued to go down year over, selling on average in only 65 days compared to 84 days in September the year previous, that is 23% faster. In addition, strong demand and limited supply continued to push prices up. According to the Enhanced Statistics Statistical Query Report the average sale price of properties sold in September 2017 was $366,196 which is 18% higher than that recorded by the Quinte Board in September 2016 when it came in at $309,960. Neither of these figures are indicative of a market in distress, but rather suggest that market fundamentals in the County remain healthy and strong.
In the latest news feeds, commentators have noted that buyers appear to be returning from the sidelines in urban markets with an uptick in prices and reports of stronger sales benchmarks being established, particularly in the more affordable central condominium and town house markets, giving confidence to market participants that despite two recent interest rate hikes by the Bank of Canada, the impact of recent uncertainty and instability has largely been absorbed and processed. This will inevitably translate to more positive market performance in the County moving forward. One potential unknown and potential dampening influence on buyers entering the market is the proposal by the Office of the Superintendent for Financial Institutions to extend existing stress tests beyond high ratio mortgages to conventional ones, requiring all borrowers to qualify at the higher posted rather than the discounted lending rates, regardless of the amount of their down payments. Given the recent reports regarding the rebound and stabilization in the real estate market, the likelihood of these proposals being implemented is increased. As is always the case, time will tell.
