Whenever I hear people talking about the real estate market, they are usually talking about markets in Toronto or even in Vancouver. Real estate markets are hyper-local and even here in southern Georgian Bay, we see large variances in market conditions from one town to the other even if they are less than 20 minutes apart like Wasaga Beach compared to the Town of Blue Mountains. So while the Toronto market is off to its worst start in 9 years with prices and new listings way down, that is not the case here in the Collingwood – Blue Mountain area.
Single Family Residential Homes
The number of properties sold in April 2018 was indeed was down by 20-55% in most of our communities however, one, Meaford, actually went up. We have a low volume to derive statistics from so a better way to state this is that there were 144 single family homes sold in our area last month on our MLS® system compared to 196 last year. In other words, just 52 fewer homes sold in the whole region. But putting it that way doesn’t sell newspapers, does it?
The average residential sale price of a single-family home has also dropped compared to a year ago but again, the figures are marginal and quite frankly, to be expected because the spring of 2017 was an abnormal and over-heated market where supply was so low that people were bidding prices up in a frenzy never seen before. Quite frankly, I’m surprised the prices are not lower given that we have emerged from that cycle.
The big story is the supply of homes for sale. The inventory is WAY up and in places like Wasaga Beach, there are almost 200% more homes for sale than there were in April 2017. I think Sellers are rushing now to capture what they may see as the peak in the market and, because there is more inventory to chose from if they sell and need to buy something else.
The concentration of condominium sales take place in Collingwood and the Blue Mountains where we are seeing relative stability in the market compared to a year ago. There were just 5 fewer sales and prices have climbed a little. The inventory however is also increasing substantially.
So What Now?
It’s still too early to really know if any trends are taking hold. There is no doubt that the over-heated market conditions of spring 2017 have passed but having said that, a surprising number of properties are still selling at over the asking price. In April, 23% of single family homes sold over the asking price as did 29.8% of condos and 14.3% of vacant lots.
What I see is a concentration of the over-supply of inventory being in the higher segments of the market and in homes priced over $500,000. This may be a direct consequence of the combination of higher interest rates and the new mortgage rules that make it harder for Buyers to qualify at the same levels as they have in the past. Consumer confidence remains very high, unemployment rates remain low and, the economy is performing well so there is no other real explanation.
In my experience, the single biggest impacts on the real estate market is interest rates. We are now in a climate of rising rates; albeit slowly. As rates continue to rise, we will see increasingly, a return to more balanced market conditions and that movement has already begun. It’s a good thing for both Buyers and Sellers who will have a better opportunity to make better decisions with a greater number of options available.